AWARDS AND RECOGNITIONS Awards and Recognitions

Product Innovation Best New Bond of the Year’ Award 1st Indian India International Finance to join The Asset Triple A Corporation’s Natural Capital Country Awards (IFC Washington’s) Coalition Global SME Finance 2018 Awards

Global winner - SME Bank of the Year – Golden Peacock Payments India Award For ‘Technology Project Asian Banking & Sustainability’ – 2018 Awards-2018’, Finance Golden Peacock by The Banker Awards Award

Only to Winner for outstanding Best Bank in India for be selected in performance in Instant Small and DJSI Emerging Payment Products Medium-Sized Markets National Payments Enterprises (SMEs)’ 4th year in a row Excellence Awards (NPCI) Asiamoney Best Bank (2015-2018) 2017 Awards 2018

Selected in Best Implementation of Digital Payments’ FTSE4Good CSR Excellence Award Emerging Index award Apex India Awards BW Businessworld for the second Digital India Summit & consecutive year Awards 2018

‘Best Bank in India’ for Payments, Blockchain Initiative, API Initiative, Financial Supply chain Management Deal, Winner ‘Safe Drinking Trade Finance Deal, Automation Application and Water’ category Trade Finance Social Footprints The Asian Banker Transaction Banking Awards 2018 Awards 2018 BANKING RE-IMAGINED In its 15 years tenure, has evolved into a national champion in areas across innovation, governance, inclusion and financial excellence. As India’s first and only Greenfield Bank, YES BANK has now successfully emerged as one of the top brands of the country. A pivotal focus area of the Bank continues to be its A.R.T (Alliances & Relationships with underlying Technology) and Future Now philosophies, key to YES BANK’s ongoing growth. The Bank will continue to leverage its leadership in technology-driven innovation, knowledge banking, responsible banking ethos and skilled human capital to pave the way for a new era in the ‘Future of Banking’. Contents 02-15 184-303 CORPORATE OVERVIEW FINANCIAL STATEMENTS YES BANK at a glance 2 Standalone Financial Statements Banking Re-Imagined 3 Independent Auditor’s Report 185 Financial Highlights 4 Balance Sheet 194 Message from the Chairman 6 Profit and Loss Account 195 Managing Director & CEO’s Communique 8 Cash Flow Statement 196 Non-Executive Chairpersons 12 Schedules 198 Past Managing Director & CEO 12 Board of Directors 13 Consolidated Financial Statements Management Team 14 Independent Auditor’s Report 258 Balance Sheet 268 Profit and Loss Account 269 16-67 Cash Flow Statement 270 SUSTAINABILITY REVIEW Schedules 272 Form AOC - 1 & Disclosures under Basel III 303 Sustainability Disclosures 17 Annual Business Responsibility 58 Report (ABRR) 68-183 STATUTORY REPORTS Management Discussion and Analysis 69 Directors’ Report 99 Report on Corporate Governance 131

View our Annual Report online We provide our annual report online, which allows us to reduce the amount of paper we print and distribute. At YES BANK, our differentiation begins with a single word – YES.

YES BANK, India’s fourth largest private sector YES BANK has a pan-India presence bank is a high quality, customer centric, service across all 29 states and 7 Union driven Bank catering to the Future Businesses Territories in India with a footprint of of India. Since inception in 2004, YES BANK has grown into a ‘Full Service ’ providing complete range of products, 1,120 1,450+ Branches ATMs services and digital offerings, catering to corporate, MSME & retail customers. YES BANK operates its , Merchant banking & Brokerage businesses through YES SECURITIES and its Mutual Fund business including an IBU at GIFT City, and a through YES Asset Management (India) Limited, Representative Office in Abu Dhabi. both wholly-owned subsidiaries of the Bank.

VISION YES BANK is committed to its vision of ‘Building India’s Finest Quality Large Bank of the World in India’ having evolved its organizational ethos into the ‘Professionals’ ’.

2 Banking Re-Imagined BANKING RE-IMAGINED

Everything begins with an idea – Earl Nightingale. YES BANK’s started with a vision of building a world-class bank in India from ground zero, assembled brick-by-brick by a robust team of highly trained professionals, catering to the dreams of New India.

Commencing in 2004, the journey has been truly technology and attractive demographic factors remarkable for India’s first and only Greenfield Bank, cuts across the value chain and impacts the way YES BANK. In its lifecycle, the Bank has grown conduct their businesses. Given the speed manifold from being the largest small private sector of technology driven disruptions in the Banking bank in 2010 to being the largest medium sized sector, the Bank had identified early on, the need private sector bank in 2015 to one of the fastest to transform and therefore re-imagine banking growing large banks in 2018 in a fairly short span altogether for this new, connected world by offering of eight years. a slew of new-age services to customers. YES BANK has taken extensive strides towards broadening Under the aegis of the Bank’s astute, tireless and horizons and inching closer towards using data dynamic leadership, the Bank has built a vibrant, engineering and data science by increasingly aspirational and highly successful brand. The Bank using tools like predictive analytics to offer focused has striven hard to be ahead of the curve, creating services to the customers. simple solutions and a robust ecosystem for clients to maximize their business potential and improve quality With technology touching every aspect in our of lives for the masses, especially around financial lives, the Bank remains steadfast in ensuring inclusion, civic betterment and technologically a re-imagined and reinvigorated empowering businesses. transformation journey.

YES BANK, now in its teen years, believes Therefore, the Bank’s transition into the most that it has the spirit, character and vision to crucial period in its growth phase will now be evolve into a national champion that would powered by Future Ready initiatives that the Bank define industry standards across innovation, has been meticulously building for the last decade governance, inclusion and financial excellence. or so through the A.R.T (Alliances & Relationships with underlying Technology) and Future Now No other sector of the economy is as interdependent philosophies. as banking is and the Bank understands the need to, in the new world, restore, renew and rebuild As the Bank moves forward, Digital and technology relationships with the entire ecosystem. driven innovation, Knowledge Banking, Responsible Banking and a focus on Future Ready Human Capital In ways more than one, the future of banking has – values that have held the Bank in good stead over arrived and at present the industry is going through the years, will continue to be its growth engines and its ‘uber moment’. The influx of superior edge help steer the Bank in its large phase of growth.

Annual Report 2018-19 3 Financial Highlights

TOTAL ASSETS (` in Crore) ADVANCES (` in Crore) DEPOSITS (` in Crore)

2019 3,80,826 2019 2,41,500 2019 2,27,610 2018 3,12,446 2018 2,03,534 2018 2,00,738 2017 2,15,060 2017 1,32,263 2017 1,42,874 2016 1,65,263 2016 98,210 2016 1,11,720 2015 1,36,170 2015 75,550 2015 91,176 2014 1,09,016 2014 55,633 2014 74,192

5 year CAGR 28.4% 5 year CAGR 34.1% 5 year CAGR 25.1%

Healthy momentum sustained in More than 40% contribution to Deposits growth faster Balance sheet growth incremental growth from Retail than the industry

CASA RATIO (In %) SHAREHOLDERS FUNDS (` in Crore) CAPITAL ADEQUACY RATIO (In %)

2019 33.1% 2019 26,904 2019 16.5% 2018 36.5% 2018 25,758 2018 18.4% 2017 36.3% 2017 22,054 2017 17.0% 2016 28.1% 2016 13,787 2016 16.5% 2015 23.1% 2015 11,680 2015 15.6% 2014 22.0% 2014 7,122 2014 14.4%

5 year CAGR 35.7% 5 year CAGR 30.5%

CASA CAGR of >35% - higher than Internal accruals - 5 year CAGR, Balance sheet and deposit growth higher than Balance sheet growth

GROSS NPA (In %) NET NPA (In %)

2019 3.22% 2019 1.86% 2018 1.28% 2018 0.64% 2017 1.52% 2017 0.81% 2016 0.76% 2016 0.29% 2015 0.41% 2015 0.12% 2014 0.31% 2014 0.05%

4 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

NET INTEREST INCOME (` in Crore) NON INTEREST INCOME (` in Crore) NET PROFIT (` in Crore)

2019 9,809 2019 4,590 2019 1,720 2018 7,737 2018 5,224 2018 4,225 2017 5,797 2017 4,157 2017 3,330 2016 4,567 2016 2,712 2016 2,539 2015 3,488 2015 2,046 2015 2,005 2014 2,716 2014 1,722 2014 1,618

5 year CAGR 29.3% 5 year CAGR 21.7%

NII Growth on back of Healthy growth across transactional FY2018-19 Net Profit Impacted by growth in Advances Corporate, Trade, CMS and contingent provisioning Granular Retail Fees

NET INTEREST MARGIN (In %) COST TO INCOME RATIO (In %) BASIC EARNINGS PER SHARE (`)

2019 3.2% 2019 43.5% 2019 7.4 2018 3.5% 2018 40.2% 2018 18.4 2017 3.4% 2017 41.4% 2017 15.8 2016 3.4% 2016 40.9% 2016 12.1 2015 3.2% 2015 41.3% 2015 9.9 2014 2.9% 2014 39.4% 2014 9.0

FY 2018-19 Core NIMs stable; headline Sustained investments in Branches, impacted by interest reversals from NPA People and Technology

RETURN ON ANNUAL AVERAGE ASSETS (In %) RETURN ON EQUITY (In %)

2019 0.5% 2019 6.5% 2018 1.6% 2018 17.7% 2017 1.8% 2017 21.5% 2016 1.7% 2016 19.9% 2015 1.6% 2015 19.0% 2014 1.6% 2014 25.0%

Adjusted RoA for FY 2018-19 at 0.9% Adjusted RoE for FY 2018-19 at 11.4% prior to taking into consideration prior to taking into consideration contingent provisioning contingent provisioning

Annual Report 2018-19 5 Message from the Chairman

DEAR SHAREHOLDERS, FY 2019-20 will be the year when India’s strong domestic fundamentals The global economic indicators remain largely favorable and will insulate it from a global environment while growth is moderating, this offers a great opportunity for fraught with uncertainty and volatility. economies to boost human capital, increase opportunities for The overall economic outlook is positive. investments, and promote trade integration. India is in a state of consolidation with strong transitional undercurrents at various cross sections of the economy. It has peaked in the BFSI sector and the health of the sector & the economy are expected to only better post the progressive changes taking place.

The year 2018 was a year of heavy lifting for the Banking sector with the sector undergoing major transformational changes.

In order to support the growth in the economy, the banking sector is set to keep pace with it with renewed vigour. Regulatory measures such as the creation of critical institutional architecture in the form of Central Repository of Information on Large Credits (CRILC), Insolvency and Bankruptcy Code (IBC) and the National Company Law Tribunal (NCLT), has started to deliver on asset quality resolution, with unprecedented speed in judgments seen in FY 2018-19. With strong economic fundamentals, changes in the regulatory climate and transformational technologies more accessible and, powerful than ever before, there is possibly no better time than now for revival of the sector.

6 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

In YES BANK’s 15 years of institutional Bank comprises of 12 Directors, including excellence, the Bank has strategically 7 Independent Directors, strengthening the evolved into a digitally savvy Bank Bank’s governance commitment. and incorporated technology in its everyday operations. The Bank has Mr. Rana Kapoor demitted the office of successfully adopted the mantra of Managing Director and CEO of the Bank collaboration and co-creation with w.e.f. February 1, 2019. I appreciate the Fintech startups for its technology contribution of Mr. Rana Kapoor for his led innovations. leadership with active support, guidance, direction and supervision of the Board With investments in robust digital of Directors, due to which the Bank has ecosystems such as Payments, API, AEPS & grown to become the Fourth largest Blockchain technologies through long-term Private sector Bank with Total Assets partnerships, YES BANK is poised to be the exceeding `3.80 lakh crore. The Bank, cutting edge Digital Bank in India. over the last 15 years of performance, has a demonstrated track record of consistent The Bank continued to receive accolades delivery of business & financial outcomes from prestigious national and international across all critical parameters such as capital bodies for its exemplary performance adequacy, profitability, steady growth etc. on multiple parameters encompassing Business outcomes, Sustainability, During the period from February 01, 2019 Innovation, Technology and Human to February 28, 2019, Mr. Ajai Kumar held Capital among others. charge as interim Managing Director & CEO of the Bank. I appreciate the contribution During the year under review, the Board of made by him during his tenure. Directors continued to extensively engage with the top and Senior Management Mr. Ravneet Gill took charge as Managing leaders of the Bank during various Board/ Director and CEO of the Bank from March 1, committee meetings. Such engagements 2019. With an inspiring past and strong have provided the Board with an present, I am sure the Bank will continue its opportunity to understand the strength stellar performance towards the next phase and depth of the Bank’s leadership and of growth in ‘Building the Finest Quality guide them further to ensure long-term Large Bank of the World in India’ under the sustenance of business strategy. new leadership.

During the year, there have been some changes at the Board level of the Bank. The Board of Directors represents seasoned leaders with proven credentials, and represents critical Committees on BRAHM DUTT the Board in accordance with their areas Chairman of expertise. The current Board of the

Annual Report 2018-19 7 Managing Director & CEO’s Communique

DEAR SHAREHOLDERS, Over the last year, the economic and business landscape has undergone I am delighted to engage with you for the first time in my role as substantial changes, some of which are still MD & CEO of YES BANK and, on behalf of the institution, take gradually unfolding. this opportunity to thank you for your support which is a matter of great strength for us. For the Indian economy, the global economic and financial market impact was profound in the first half of 2018-19. The country was confronted with the cumulative impact of a strengthening US Dollar and rising crude oil prices until early October 2018. This resulted in a sharp adjustment in Rupee amidst volatile trading in emerging market currencies. To ward off inflationary risks, the Monetary Policy Committee of the (RBI) hiked the benchmark repo rate by a total of 50 basis points between June and August 2018, while also shifting its policy stance to ‘calibrated tightening’ from ‘neutral’. However, these negative externalities started receding thereafter with escalating concerns on global economic growth and geopolitical interventions helping to provide a backstop to the external contagion from turbulence in currency and commodity markets. This created the backdrop for the RBI to change its monetary policy course back to neutral (aided by deflationary conditions in food items) in February 2019, followed by a cumulative 50 basis point cut in the repo rate by April 2019. With retail inflation expected to stay within RBI’s mandated target of 4% for the third consecutive year in 2019-20, I expect the to opt for further incremental monetary and liquidity easing.

8 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

A calibrated domestic policy easing would The combination of GST and Digitization be a sine qua non for guarding against has started ushering in the desirable drive the cyclical slowdown in global economic of ‘Formalization through Financialization’ growth (amplified by the uncertainty of the economy and opens up exciting on global trade protectionism), besides opportunities for digital forays. providing a source of support to sectors (like Automobile, Housing, Consumer Bank based payments and settlements Durables, etc.) that came under some have doubled in the last five years. With the communicable stress from tightening of advent of the JAM (Jan Dhan, Aadhar, and liquidity and financing conditions for the Mobile) Trinity, financial transactions will NBFC (Non-Banking Financial Companies) undergo a paradigm shift in coming years. sector in the third quarter of 2018-19 and A case in point is the recent announcement which caused a fair degree of disruption in of transfer payment by the central and domestic financial markets. few state governments to support the rural economy. The present dispensation Evolving Economic is completely different from earlier policy efforts of supporting rural demand as Microstructure this would predominantly involve cash Meanwhile, the microstructure of the transfers via designated bank accounts. Indian economy continues to evolve with Overtime, the combination of Jan Dhan, noticeable and transformational changes, MUDRA, and such government transfer in some cases. At a broader level, India has payments would help in inculcating and leapfrogged to secure a rank of 77 in World nurturing banking behaviour. Bank’s Doing Business Assessment Report, from 100 earlier, thereby making it one of Juxtaposed against this evolving trend is the fastest improvers globally on the metric the rise in millennials, who are fast moving, of ‘ease of doing business’. Further, the IBC digital savvy, and highly aspirational. (Insolvency and Bankruptcy Code) and the YES BANK has demonstrated organizational GST (Goods and Services tax) have started agility in catering to such diverse and to transform the ‘way of doing business’ evolving banking requirements. in India by altering the incentive structures and bringing about a paradigm shift in Together with India Stack and cutting commercial and economic behaviour of all edge innovations from fintechs, your key stakeholders. Bank has ushered in an irreversible transformation of banking and Opportunities and Challenges financial industry in terms of customer experience and overall productivity. From a banking perspective, the landscape is getting intensive and At a macro level, the risk of global trade exciting. With the balance between war and Brexit presents risks, many of creditor and debtor being restored which are hard to quantify at this stage, by the IBC framework, unlocking of which need careful and prompt responses stuck investments has already started from policymakers. At a micro level, the witnessing a churn. banks will constantly need to assess the

Annual Report 2018-19 9 risk-reward structure, and manage market, You’ll be pleased to learn that the building credit, technology and operational risks in blocks for the execution of this strategy a fast changing environment. I would like to are already in place and monetising it does assure you this has the highest attention of not entail a long build out phase or large the senior leadership team of the Bank. investment. This will bolster our earnings with a growing base of diversified, annuity Staying Ahead revenues and add to the solidity of our businesses and make us more meaningful As you are aware, the Bank has undergone to our growing universe of clients. We have a leadership transition. However, it is most every reason to feel most optimistic gratifying to observe that the YES BANK about the future. brand remains a trusted name and partner – owing mainly to the trust that our customers While challenges exist, the growth & stakeholders have reposed. We are opportunity for thankful for this privilege and stand deeply remains most compelling. And it is my committed to restoring, renewing and strong belief that we are well poised rebuilding our relationships with the passion to harness the same. that has been the hallmark of this young & dynamic institution. With your continued support, I am fully confident that we can accomplish the My colleagues and I deeply appreciate the ambitious goals that we set for ourselves steadfast support of all our shareholders and come to be recognised as not just who stood by us and hope you continue a successful, leading bank, but also as to do so as we embark upon an exciting, one of the country’s most admired and transformational and inspiring new ascent. valuable companies. The key tenets of this phase of our journey shall be the following: ▲▲ Create a more granular franchise and a balanced earnings mix between wholesale & retail ▲▲ Strong & sustained liabilities RAVNEET GILL growth focus Managing Director & CEO ▲▲ Build & monetise new businesses through digital innovation ▲▲ Conform to the highest standards of risk management, compliance & governance ▲▲ Reinforce commitment to responsible banking & social engagement

10 Banking Re-Imagined

Non-Executive Chairpersons

MR. BRAHM DUTT MR. ASHOK CHAWLA MR. M. R. SRINIVASAN (From January 11, 2019 – (From October 30, 2016 – (From June 27, 2013 – till present) November 14, 2018) June 26, 2014)

MS. RADHA SINGH MR. S. L. KAPUR LATE MR. ASHOK KAPUR (From October 30, 2014 – (From January 2009 – (From September, 2004 – October 29, 2016) April 2012) November 2008)

Past Managing Director & CEO

MR. AJAI KUMAR MR. RANA KAPOOR (From February 1, 2019 – (From September 1, 2004 – February 28, 2019) January 31, 2019)

12 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

Board of Directors

MR. BRAHM DUTT MR. AJAI KUMAR MR. ANIL JAGGIA Non-Executive Chairman Non-Executive Non Additional Director (Independent) (w.e.f. January 11, 2019) Independent Director (w.e.f. January 24, 2019)

MR. MAHESWAR SAHU LT. (DR.) MUKESH DR. PRATIMA SHEOREY Additional Director (Independent) SABHARWAL (RETD.) Independent Director (w.e.f. January 24, 2019) Independent Director

MR. RAVINDER KUMAR KHANNA MS. SHAGUN KAPUR GOGIA MR. SUBHASH Additional Director (Non-Executive Additional Director (Non-Executive CHANDER KALIA Non Independent) Non Independent) Non-Executive Non Independent (w.e.f. April 26, 2019) (w.e.f. April 26, 2019) Director

MR. THAI SALAS VIJAYAN MR. UTTAM PRAKASH MR. RAVNEET GILL Additional Director (Independent) AGARWAL Managing Director & CEO (w.e.f. December 3, 2018) Additional Director (Independent) (w.e.f. March 1, 2019) (w.e.f. November 14, 2018)

Annual Report 2018-19 13 Management Team

AJAY RAJAN AMIT SUREKA AMIT KUMAR AMIT SANAN Group President Group President Group President Group President

ANUP PUROHIT ARUN AGRAWAL ASEEM GANDHI ASHISH AGARWAL Group President Senior Group President Group President Senior Group President

ASIT OBEROI DEODUTTA KURANE DEVAMALYA DEY JYOTI PRASAD RATHO Senior Group President Senior Group President Senior Group President Group President

KAPIL JUNEJA KUMAR LATA PILLAI NAMITA VIKAS Group President PADHMANABHAN Group President Group President Senior Group President

NEERAJ DHAWAN Senior Group President

14 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

NIKHIL SAHNI NIRAV DALAL PARAG PUNIT MALIK Group President Senior Group President GORAKSHAKAR Senior Group President Senior Group President

R. RAVICHANDER RAJ AHUJA RAJAN PENTAL RAJAT MONGA Group President Senior Group President Senior Group President Senior Group President

RITESH PAI SANJAY NAMBIAR SANJIV MISRA SHUBHADA RAO Group President Group President Group President Group President

SUMIT GUPTA VINEET DHAR VINOD BAHETY SHIVANAND Senior Group President Group President Senior Group President SHETTIGAR Group President and Company Secretary

Annual Report 2018-19 15 SUSTAINABILITY REVIEW Sustainability Disclosures 17 Annual Business Responsibility Report (ABRR) 58 Corporate Sustainability Statutory Financial Overview Review Reports Statements

YES BANK’s Triple Bottom Line Approach

Ever since its inception, YES BANK has focused on creating approach to positively impact its stakeholders and shared value, through its Responsible Banking ethos, in augment the institutional excellence, achieved over the line with its vision of building the 'Finest Quality Large years. Since FY 2015-16, the Bank has adopted the Bank of the World in India'. Over the years, the Bank is Integrated Reporting framework of the International aligning its core strategy to the Sustainable Development Integrated Reporting Council (IIRC), enabling it to disclose Goals (SDGs), weaving sustainability principles into its its value creation strategy, through resources and business processes. The Bank endeavors to design relationships that get used and affected by it. These are innovative and sustainable pathways towards holistic collectively referred to as ‘the capitals’ and comprise of (a) value creation. financial capital, (b) manufactured capital, (c) intellectual capital, (d) human capital, (e) social & relationship capital The Bank strives to address developmental challenges and (f) natural capital. Capitals are stocks of value that through accelerated innovation by action along economic, increase, decrease or transform through activities environmental and social priorities. and outputs of the Bank. The report also explains how YES BANK interacts with the external environment and YES BANK shares a consolidated view of its performance the capitals to create value over the short, medium on economic, environmental, and social parameters and long term. through this report. The report also shares the Bank’s

Manufactured Capital Financial Capital

Intellectual Capital Human Capital

Social & Relationship Capital

Natural Capital

Annual Report 2018-19 17 Business Overview YES BANK'S VALUE CREATION STRATEGY

4

1 6 2

Manufactured Financial Human Capital Capital Capital

Tangible and intangible Funds available with the Bank Employees’ competencies, infrastructure, including IT through customer deposits, knowledge & experience, and assets share equity and market debt training programs

Indicators Indicators Indicators FY 2017-18 FY 2017-18 FY 2017-18 1,100 branches Net Profit: `4,226 crore Total employees: 18,238 1,724 ATMs Balance Sheet size: Training hours: 728,605 `312,446 crore BoP outreach: 21 lakh families

FY 2018-19 FY 2018-19 FY 2018-19 1,120 branches Net Profit: `1,720 crore Total employees: 21,136 1,456 ATMs Balance Sheet size: Training hours: 709,174 `380,826 crore BoP outreach: 25 lakh families

1 4 5 2 3

YES SCHOOL OF BANKING: Forged ties with national and 1 Development and upkeep of 2 3 branches, NOCs capacity building global thought leaders 5 Cs Engagement model: Culture, Developed thought pieces aimed Career, Communication, at positively impacting industry Connect & Care and policy

Major consumption of natural Responsible Banking ethos 4 5 6 Drive business performance resources Unique scalable & sustainable projects

18 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

5 3

Intellectual Natural Social & Capital Capital Relationship Capital Collective knowledge, Natural resources used by the Relationships the Bank creates research, thought leadership, bank for its operations and and fosters with its customers, brand management and financing for natural resource regulators, suppliers and intellectual property preservation and climate risk community at large mitigation Indicators Indicators Indicators FY 2017-18 FY 2017-18 FY 2017-18 57 advisory mandates – FASAR Specific Emissions: YES COMMUNITY:

1.79 CO2e per FTE 3.2 million+ lives Clean energy exposure: Access to safe & clean drinking 1,264.96 MW water: 40 million+ lives Sustainable MSMEs: 28,454 workers trained

FY 2018-19 FY 2018-19 FY 2018-19 64 advisory mandates – FASAR Specific Emissions: YES COMMUNITY:

1.59 CO2e per FTE 0.235 million lives Clean energy exposure: 2,705 Access to safe & clean drinking MW water: 35 million lives Sustainable MSMEs: 37,555 workers trained

6 7

8

1 A ‘Digical – Digital + Physical’ infrastructure approach to achieve scale 2 Drives business performance Manage supply-chain & procurement practices to improve efficiencies and lower costs

3 Knowledge-based approach to provide 4 Supports daily operations 5 Employer of choice clients with customized solutions Innovative products and services

6 RE Financing 7 Avoiding emissions 8 Supports local outreach Awareness on sustainable practices

Annual Report 2018-19 19 YES BANK’s Sustainability Approach

YES BANK recognizes its significance as a public trust ▲▲ Being the only Indian Banking signatory to Natural institution and strongly believes in being a catalyst Capital Finance Alliance (NCFA) and Chair of for sustainability, driving action towards sustainable Steering Committee development. The Bank has forged strategic alliances to ▲▲ Launching India’s First Green Retail Liability Product deliver internal and external, positive socio-environmental in 2018, Green Future Deposits impact, catering to the needs of its entire stakeholder spectrum. In line with the ethos of shared value creation, ▲▲ Being the sole arranger and subscriber to India’s first it has woven sustainability considerations into the DNA of Social Bond, with proceeds allocated to Affordable its core business strategy and processes. Housing ▲▲ Being the first and only Indian Bank to be listed on DJSI^ Emerging Markets for four years consecutively (2015-2018); selected in the prestigious FTSE4Good Emerging Index for two consecutive years (2017‑2018); selected in MSCI# ACWI@ ESG‡ Leaders & SRI Indexes in 2017; included in Vigeo Eiris Best Emerging Markets Performers Ranking (2018) and Responsible Banking is a key differentiator at YES BANK, the only Indian Bank to be awarded ‘Prime’ status by and one of the six strategic pillars along with Trust, OEKOM Research Ag Transparency, Knowledge, Technology and Human Capital. The Bank, in line with its Responsible Banking ▲▲ Being the first Indian signatory to the UNEP FI† ethos, strives to evangelize a sustainable economy by ▲▲ Attracting investor confidence resulting in credit adopting strategies that link sustainable development with lines from reputed multilaterals and development stakeholder value creation. Responsible Banking is firmly finance institutions (DFIs) like IFC, Overseas Private embedded into the Bank’s strategy, as a fundamental Investment Corporation (OPIC), Asian Development principle that runs across all functions of the Bank and Bank (ADB), Netherlands Development Finance acts as an enabler to deliver holistic and inclusive growth. Company (FMO), European Investment Bank (EIB) and the Development Bank of Austria (OeEB) This laser-sharp focus on sustainability is reflected in YES BANK’s multiple ‘industry-first’ achievements that ▲▲ Becoming the first Indian bank to join the Carbon have established its legacy of institutional excellence over Pricing Leadership Coalition (CPLC) the past 15 years. Unique landmark transactions coupled ▲▲ Being the first Indian bank to support the with innovative business initiatives in the sustainability recommendations of the Financial Stability Board’s sphere have enabled the Bank to demonstrate Task Force on Climate-related Financial Disclosures exemplary performance across environmental, social, and (TCFD) governance aspects by: ▲▲ Being the first Indian banking sector signatory to UN ▲▲ Launching India's first-ever Green Infrastructure Global Compact, abiding by its ten principles and Bond in 2015, followed by the private placement by continuing to report Communication on Progress at International Finance Corporation (IFC) for Green GC Advanced level Masala Bond and issuing Green Infrastructure Bond ▲▲ Being the first Indian banking signatory to the CDP with FMO* in 2016 and reporting its carbon emissions since 2009 ▲▲ Committing to mobilize USD 5 billion towards climate action by 2020 *Netherlands Development Finance Company ^Dow Jones Sustainability Indices ▲▲ Pledging to mobilize USD 1 billion by 2023 towards #Morgan Stanley Capital International solar projects, and USD 5 billion till 2030 @All Country World Index ‡Environmental, social and governance ▲▲ Being the first Bank globally to migrate to ISO †United Nations Environment Program Finance Initiative 14001:2015

20 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

FINANCIAL CAPITAL Financial Capital is the value of money that the Bank obtains from the providers of capital, which is used to support its business activities. The profits generated thereof, are distributed amongst its stakeholders, as well as retained to further fund business activities.

L380,826.17 crore L20,496.94 crore L1,720.28 crore 25 lakh Balance Sheet Remitted through Net Profit Families impacted YES MONEY through YES LEAP

Highlights of Financial Performance Economic Value Generated, Distributed, and Retained

FY 2018-19 FY 2017-18 Particulars Remarks ` in ‘000 ` in ‘000 Economic Value Generated Revenues 342,992,801 254,912,551 P&L Account, Annual Report 2018-19 TOTAL 342,992,801 254,912,551 A Economic Value Distributed Operating costs# 37,945,115 30,238,599 Schedule 16 – Operating Expenses, P&L Account, Annual Report 2018-19 Employee wages and benefits 24,697,653 21,889,199 Schedule 16 – Operating Expenses, P&L Account, Annual Report 2018-19 Payments to providers of capital 204,381,149 130,791,725 Annexure A Payments to Government 7,650,336 20,814,834 Annexure B Community Investments 537,800 452,100 Annexure 1, Directors’ Report, Annual Report 2018-19 TOTAL 275,212,053 204,186,457 B Economic Value Retained* 67,780,748 50,726,094 A-B Annexure A Interest on deposits 136,871,140 93,834,137 Schedule 15 – Interest Expended, P&L Account, Annual Report 2018-19 Interest on RBI/ Inter-bank borrowings/ 60,764,723 29,840,501 Schedule 15 – Interest Expended, P&L Tier I & Tier II debt instruments Account, Annual Report 2018-19 Others 521,297 1,628,986 Schedule 15 – Interest Expended, P&L Account, Annual Report 2018-19 Dividend paid for last year 6,223,989 5,488,101 P&L Account, Annual Report 2018-19 Payments to providers of capital 204,381,149 130,791,725 Annexure B** Provisions made for Income Tax during 6,370,684 19,697,457 Schedule 17 - Provisions & Contingencies, the year Annual Report 2018-19

Tax on Dividend paid last year 1,279,652 1,117,377 P&L Account, Annual Report 2018-19

Payments to Government 7,650,336 20,814,834 P&L Account, Annual Report 2017-18

* Calculated as per the GRI 201 Standards. # Excluding Employee Wages and Benefits, which has been shown separately. ** Only includes the taxes shown in the Bank’s Statements of Accounts in its Annual Reports for 2018-19 and 2017-18, and does not include all the payments to the Government made by the Bank.

Annual Report 2018-19 21 A detailed Business Segment Overview is presented as the help of over 40 BC partners, the unit has provided part of the ‘Management Discussion and Analysis’ section cumulative finance of over` 8,500 crore and has reached on pages 69 of the Annual Report for 2018-19. out to 25 lakh families in rural and semi-urban India, across 260 districts. In 2018-19, ISB has also launched This section includes a performance analysis of the a customized group product – YES SHIELD for Bank’s key business operations with social, economic, the YES LEAP clients. Being considerate about the needs and environmental impacts on stakeholders. of this segment, ISB has further launched YES SMILE (Specialized Micro Individual Loan for Enterprises) for the Inclusive & Social Banking and upgraded microfinance clients who have the aspiration to grow their micro business. This Micro Individual Business Microfinance Banking Loan is aimed at providing higher ticket size loans to the Since inception, YES BANK has focused on ‘inclusive graduated microfinance clients and help them further growth’ for the emerging new India by introducing grow in their existing business. As 100% of these groups specialized products and services for rural and semi-urban associated with the YES LEAP program are women-centric, customers. The Bank remains committed to create the initiative has been able to contribute significantly equal financial opportunities for all. Towards this end, it towards strengthening women entrepreneurship and has has widened access to capital through a two-pronged paved the way for women empowerment in remote areas strategy. The Bank has promoted microfinance as a new of the country. asset class through Microfinance Banking (MFB) and has mainstreamed bottom-of-the-pyramid (BoP) clients Enabling digital platforms through Inclusive and Social Banking (ISB). The Bank has instituted Ganaseva—a customized, semi-automated loan origination and loan management Ensuring financial inclusion system—to enhance its impact and delivery mechanisms. With the objective of offering focused financial solutions The system enables real-time tracking of all of the for India’s under-banked and unbanked population, Bank’s activities and offers flexibility to build in adequate YES BANK has fostered key partnerships that amplify regulations and required risk controls. The platform its impact. It has adopted the guiding principle of Frugal also provides high-quality informative reports with data Innovations for Financial Inclusion (FI4FI), to systematically analytics. In line with its digital focus, YES BANK has leverage Information, Communication & Technology (ICT) undertaken a number of digital interventions aimed and frugal business models. at increasing transparency and credibility, reducing turnaround time (TAT) and enhancing customer Microfinance Banking fulfills the financial inclusion experience. Some of the Bank’s key interventions include agenda by catalyzing the growth of India’s microfinance digitizing field reporting with real-time GPS tracking of industry. The Bank’s elaborate product suite, spans across field staff through Microsoft Kaizala app, digital training term loan facilities to Microfinance Institutions (MFIs) modules, cashless transactions and pre-printed and for further on-lending, cash management services, loan paperless documentation, and digitization through Karvy. syndications and rated capital market loan products like pool securitization and Pass Through Certificates (PTCs). Taking a cue from the RBI guidelines on Rationalization of Branch Authorization policy regarding BC Banking The Microfinance Banking division caters to the financially Outlets, YES BANK opened 21 new BC operated Banking marginalized by extending these services through Outlets (BCBOs) in select unbanked rural locations. 37 major clients, which are essentially MFIs spanning This has enabled the Bank to provide customized banking across 29 states. products and services in locations where it was difficult to set up a Bank Branch, thereby contributing towards The Inclusive & Social Banking (ISB) division has designed the Bank’s Financial Inclusion goals. The Bank leverages a flagship program – ‘YES Livelihood Enhancement innovative digital solutions like Micro ATM for providing Action Program (YES LEAP)’ through Frugal Innovations banking services in these outlets. for Financial Inclusion (FI4FI). Under this program, the Bank partners with MFIs, which are credible NGOs/private Imparting financial literacy institutions, appointing them as Business Correspondents YES BANK aims to promote the basic understanding of (BC). These BCs provide financial services (such as credit, financial concepts and financial management principles savings and insurance) to women Self-Help Groups amongst segments of the society which are vulnerable (SHGs)/Joint Liability Groups (JLGs). This allows the Bank and susceptible to financial frauds. The Bank intends to leverage its BC partners’ extensive footprints and to help them build and strengthen their financial scale up its product and service offerings for the BoP, decision-making capability. at their doorstep. Since inception of the business, with

22 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

ISB follows a model that includes financial literacy trainings towards going digital and has integrated this strategy as a part of the curriculum and day-to-day operations. across its banking ecosystem. It ensures ample opportunity for customer interaction with the Bank and BC staff. Women clients are imparted The size and volume of digital banking transactions done training through a process called Central Group Training through YES BANK’s products and services continued to (CGT) and its efficacy is assessed through a verbal scale rapidly in FY 2018-19. The Bank has consistently interactive test called Group Recognition Test (GRT). been ranked as First since inception for processing UPI based Merchant transactions (market share in merchant The Bank and BC staff also undergo continuous payments as on March 19 is 35%) and second in terms training through ‘Train the Trainers’ classroom sessions, of overall Payment Service Provider volumes across audio calls, and virtual presentations. The Bank uses the UPI ecosystem in FY 2018-19 (overall market digital modules to train staff further and enhance its share as on March 19 is 31%). The total number of UPI reachability and impact. users for YES BANK crossed 27.57 crore and the Bank processed ~143 crore transactions amounting to ~`2.35 YES BANK maximizes communication with clients lakh crore in FY 2018-19. With transaction volumes for through short story-based push call messages—on Immediate Payment Service (IMPS) witnessing 82% financial education topics—that are designed and sent growth year-on-year, the Bank has also been termed to clients in vernacular languages. For this, the Bank as the top remitter among its peer group, based on has collaborated with Awaaz.De (a technology company transaction volumes (according to NPCI). Aadhar Enabled that develops inclusive mobile solutions, enabling Payment Scheme (AEPS) which allows seamless financial organizations to achieve last-mile connectivity for social transactions through -based authentication, impact). The Bank has also been designing a customized the Bank has successfully processed ~15.56 crore and extensive financial literacy module, in collaboration transactions in FY 2018-19. This has resulted in with Accion International (a global non-profit with a YES BANK becoming one of the leading acquirer banks mission to advance financial inclusion to improve lives), of AEPS. The number of Mobile Banking transactions also to further spread awareness on financial services and witnessed a growth of 49.5%, with over 10 lakh registered best practices. The module is being used by the Bank’s users till date. During the reporting period, YES BANK ‘feet-on–street’ staff and the last mile BC staff for educating Debit Card transactions increased by 53%, registering a customers in remote and under-banked/unbanked volume increase of 54%. areas. The comprehensive module is available in eight vernacular languages and covers several topics, including Cognizant of the advancement in Artificial Intelligence savings, credit, financial management, insurance and (AI) space, YES BANK forayed into developing pioneering basics of banking. Over 70,000 clients have been trained AI solutions, combining human judgment with data on basic financial literacy with the help of these modules. power to personalize value and re-design the customer’s banking journey. The Bank launched YES ROBOT – All these interventions are carefully curated for the a comprehensive, secure, AI-enabled 24/7 personal underprivileged and the financially excluded sections banking assistant for its customers. Currently deployed of the society, with an aim to contribute towards the on YES BANK’s website and the Bank’s Facebook mammoth task of helping achieve financial inclusion. Messenger, YES ROBOT offers several industry-first solutions such as financial transactions, credit card Agri Product Management management and opening fixed deposits, among others, transforming the way customers bank. The Bank’s Agri Product Management (APM) unit, comprising of experienced banking and industry Other key digital banking initiatives, include: professionals with an in-depth knowledge of the priority ▲▲ Implementing a cashless solution for Puducherry sector, delivers efficient and customized banking Smart City to enable digital payments for citizens solutions for the agri-value chains. A detailed overview of and visiting tourists, in partnership with Puducherry the activities of the APM unit is provided on pages 80 of Tourism Development Corporation (PTDC) the Bank’s Annual Report 2018-19. ▲▲ Launching the Udaipur Smart City Card cum Wallet Digital Banking Solution, for digitizing payments at over 700 retail and government outlets, in partnership with the YES BANK continues to maintain a laser-sharp focus Udaipur Municipal Corporation (UMC) on fostering innovation and leveraging technological ▲▲ Launching ‘YES Digi Villages’ – India’s first-of-its- developments to enhance the banking experience for kind village adoption program to ensure instant its customers. The Bank has adopted a holistic approach paperless banking for rural customers through

Annual Report 2018-19 23 banking and agritech solutions; the program is to unbanked and under-banked Indians. YES MONEY has be implemented across 2,000 villages, empowering cumulatively remitted close to `489.48 billion in domestic 1 lakh lives remittances till date. ▲▲ Partnering with the Government of to YES MONEY is a Cash Remittance Service that leverages onboard fair price shops as BCs, in a joint initiative to existing cash remittance technologies in India, along with digitally empower over 20,000 ration shop owners the vast spread of local, family-owned retail stores and in Maharashtra and increase revenue opportunities the Bank’s pan-India commercial branch network. by extending last mile banking services to over 70 lakh citizens Previously available remittance services in India, forced ▲▲ Working closely with the Department of Information depositors to wait in long queues at bank counters, and Technology and Communication, Government required receivers, usually family members in rural India, of to launch BHAMASHAH Wallet, a to travel to a branch of the same bank. co‑branded arrangement to digitize Government to Citizen (G2C) payments YES MONEY’s innovative remittance technology, allows users to securely send money through enlisted retail ▲▲ Partnering with Chhattisgarh Infotech Promotion stores (BC agents), with an internet-enabled computer and Society (CHiPS) to onboard over 11,000 Citizen a mobile phone, to any branch of any bank across India. Service Centers (CSC) as BC agents with the aim Thus, YES MONEY has taken advantage of India’s deep to promote digital payments across the state and penetration of mobile telephony to provide a hassle-free, augment the income generation of CSCs digital, low-cost and customer-friendly service. ▲▲ Implementing an Expense Management Solution for the Maharashtra State Electricity Distribution YES MONEY FY 2018-19 FY 2017-18 FY 2016-17 Company Limited for digitizing their employee Number of Business 31 28 38 payouts across 206 field offices Correspondents 1 ▲▲ Employing Near Field Communication (NFC) based (BC) ‘Tap & Go’ card payments at Naval Office Institute, Number of 644.11 410.58 124.72 Goa, making it India’s first completely cashless transactions done defense campus, powered by YES BANK’s payment (lakh)2 solutions Total value of 20,496.94 13,281.72 4,558.59 transactions YES Money (` in crore)2

YES MONEY is YES BANK’s award-winning, innovative 1 Cumulative as on March 31, 2019 domestic remittance platform. It was launched in 2 for FY 2018–19 2011 to meet the remittance needs of migrants,

24 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

SOCIAL & RELATIONSHIP CAPITAL Social & Relationship Capital refers to the relationships the Bank develops with its customers, investors, regulators, suppliers and community at large to create shared societal value as a responsible corporate citizen.

2.35 lakh 10,859 3.5 crore 37,555 Lives touched through Farmers capacity Lives provided access MSME workers trained YES COMMUNITY enhancement to safe & clean drinking water

Since inception, YES BANK has recognized its development, has strong linkages to all the other SDGs responsibility towards the society and has remained and underpins many of them, such as SDG 3, 4, 11 and 15. committed to its role as a good corporate citizen. Over the years, the Bank has developed and implemented various In concurrence with SDG 6, YES BANK has identified programs to enhance and create shared value through ‘access to safe and clean drinking water’ as a key unique, scalable, and sustainable models to achieve this challenge and formulated a focused community objective. YES BANK’s Corporate Social Responsibility intervention to tackle it. With an aim to provide safe (CSR) policy guides the Bank to deliver internal and and clean drinking water to urban, rural, and semi-rural external positive socio-environmental impact by following communities, YES BANK launched its Livelihood and a unique approach, which focuses on: Water Security initiative in 2014.

▲▲ Promoting principles of social responsibility and In the first stage of the project, YES BANK partnered with inclusive growth through awareness and support a social enterprise with an innovative, membrane-based water purification technology. This technology requires ▲▲ Investing in socially and environmentally responsible zero electricity and no chemical dosing for the activities to create positive impact purification process, resulting in zero water wastage. ▲▲ Engaging with stakeholders to further the Conventional filters had failed to address these issues sustainability agenda of the Bank and empower in most communities, due to their dependence on them with knowledge constant electricity supply, which led to high admin costs. These innovative filters have the capability to purify water ▲▲ Collaborating with like-minded institutions and from any freshwater source and can be easily installed at forging partnerships towards addressing the needs community centers such as schools and public buildings, of the stakeholders requiring minimum maintenance. ▲▲ Monitoring the environmental and social investments of YES BANK through structured governance and In FY 2014-15, the pilot initiative successfully provided transparent performance indicators access to 62,500 lives across 12 districts in Maharashtra, through the deployment of household water filters and This unique, multi-pronged approach has enabled five community water filtration systems. the Bank to forge meaningful associations with its stakeholders, including community groups, non-profit To scale the program, on the occasion of COP21 in organizations, governments, corporate peers, and civil December 2015, YES BANK committed to touch 100 society. With the view of actualizing and concentrating million lives by providing them access to safe and clean its efforts towards SDGs, the Bank undertook various drinking water by 2020. programs and initiatives during the FY 2018-19 that were intended to address: In FY 2015-16, YES BANK joined hands with the Indian Railways to provide safe and clean drinking water at 1000 ▲▲ Livelihood and Water Security ‘D’ and ‘E’ category railway stations across India by 2019. ▲▲ Employability and Entrepreneurship The project was officially launched by Mr. Suresh Prabhu, the then Minister for Railways, Government of India, at ▲▲ Environmental Sustainability Kankavli railway station, Maharashtra. Additionally, the ▲▲ Social Transformation Bank collaborated with an implementation partner and the Jal Board to install Water ATMs in urban slums Livelihood and Water Security of Delhi, providing access to potable water to over 1 lakh beneficiaries. The water is available at a nominal price at ‘SDG 6 – Clean Water and Sanitation’ sets out to ‘ensure these ATMs, which also provide livelihood opportunities availability and sustainable management of water and to the ATM operators. sanitation for all’. Water, being at the core of sustainable

Annual Report 2018-19 25 These initiatives have a multi-pronged effect on the overall mentoring and fostering startups that are driving development of the target beneficiaries by improving innovation and digitalization across sectors. YES SCALE general health and welfare of community members. focuses on building disruptive solutions in five impact sectors of the economy – smart cities, cleantech, agritech, YES BANK has successfully provided access to safe and life sciences tech, and edutech. clean drinking water to more than 100 million people (since the launch of the program in 2014) through the YES SCALE brings together industry leaders, experts, Livelihood and Water Security initiatives. The current corporates, government bodies, investors and global partnership with Indian Railways has helped provide ecosystems to provide startups a platform to mainstream access to safe drinking water at 1,005 ‘D’ and ‘E’ category and scale their ideas. railway stations across Maharashtra, Madhya Pradesh, Gujarat, Rajasthan, Goa, and Karnataka. As part of the first cohort, the accelerator received an overwhelming response from startups with 1000+ Employability and Entrepreneurship applications. Of these, 6 startups under Cleantech, 8 startups under Agritech and 5 under Smart City Skill Development through YES STEADY accelerators received opportunities to commercialize their solutions in association with industry partners. YES BANK launched YES STEADY (Skills Training and Enhancement for Development of Youth) in 2014 to YES SCALE has brought together over 50 organizations provide employability training to the youth through across funds and technology, and as government partners targeted skill building initiatives. The Bank partnered with for advisory support. The program also witnessed active Deshpande Foundation and has provided employability participation from industry players such as Big Basket, training to 5,000 youth in Karnataka and Telangana, under MTR, Mahindra & Mahindra, Olam International, Godrej various focus sectors such as agriculture, accountancy, Agrovet, First Solar, Grasim Industries, Freyr Energy, electrical works, BPO, soft skills and primary teachers Fourth Partner Energy, and Schneider Electric India. training. The program has had a significant impact on the lives of these youth, with a substantial number opting for higher education, thereby enabling them to earn a living Environmental Sustainability or start an independent business. With a relentless commitment of protecting the environment and reducing the negative impact of human Livelihood Security activities on the planet, YES BANK has made climate Agriculture is the principal source of food and livelihood in action and environmental sustainability a core focus area. India. Demographically, it is the broadest economic sector and plays a significant role in the overall socio-economic Say YES to Sustainable MSMEs in India fabric of India. With 54.6% of the population engaged in The Micro, Small and Medium Enterprises (MSME) agriculture and allied activities, the sector plays a vital segment is the largest contributor to Indian manufacturing role in India’s economy (Source: Census 2011). Given its sector and one of the biggest employers in the country. immense contribution to the country’s Gross Domestic MSME is playing a critical role in India’s economic growth Product (GDP), YES BANK launched an initiative on and in realizing the ‘’ mission. However, the sustainable agriculture. The program empowered 10,859 sector also accounts for an estimated 70% of India’s total farmers in 16 districts across and Rajasthan industrial pollution, largely due to the use of technologies by training them in Good Agricultural Practices (GAP), that are obsolete and poor management practices. financial inclusion, and digital literacy. YES BANK’s first-of-its-kind CSR initiative ‘Say YES to GAP trainings have equipped farmers with Sustainable MSMEs in India’, was conceptualized to knowledge about better, cost-effective agricultural support MSMEs in adopting best practices in Energy practices, techniques for livelihood generation and Efficiency (EE) and Occupational Health & Safety (OHS). enhancing incomes. The financial inclusion (debt The initiative has helped MSMEs integrate sustainability instruments/sources) and digital literacy trainings into operations, reduce overall carbon footprint, (online transactions/message-based services for market enhance global competitiveness in terms of output and information) have helped farmers in better managing their efficiency, and contribute to the India’s ‘Zero Defect, Zero financial needs. Effect’ vision. YES SCALE Accelerator The intervention was launched as a pilot project in In 2018, YES BANK launched the YES SCALE, a FY 2014-15 as part of the European Union’s ‘Scaling multi-sector startup accelerator program, aimed at Up Sustainable Development of MSME Clusters in India’

26 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

initiative. Other partners to the initiative included the YES BANK’s COP21 commitment of planting 2 million United Nations Industrial Development Organization saplings by 2020. (UNIDO), Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), Global Reporting Initiative (GRI), Spreading Climate and SDG literacy Indian Institute of Corporate Affairs (IICA) and Small Empowered, aware, and young citizens are critical to Industries Development Bank of India (SIDBI) in Punjab. tackling environmental challenges of future. With this view, YES BANK collaborated with United Nations Global In partnership with the Foundation for MSME Clusters Compact Network India (UN GCNI) and an implementation (FMC) and Entrepreneurship Development Institute of partner to conduct SDG literacy workshops. India (EDII), the project has grown its focus from foundry These workshops endeavor to educate and equip the sector to cover 17 MSME sectors. youth with the necessary skills to become climate leaders. The workshops focus on climate action and natural capital. The growth in the cumulative number of beneficiaries They were designed specifically to initiate on-ground across years is depicted below: action towards conservation of environment, in line with the Green Good Deeds Campaign, spearheaded by the Year FY 2016-17 FY 2017-18 FY 2018-19 Ministry of Environment, Forests and Climate Change, Beneficiaries 3,272 21,816 49,722 Government of India. (cumulative) MSMEs MSMEs MSMEs 21,637 50,091 87,646 During FY 2018-19, workshops were conducted workers workers workers successfully covering 45 schools, involving 6300 students, who were made aware on how they could Since inception, the initiative has supported over 49,000 help drive change and initiate action to become MSMEs and benefited more than 87,000 workers across environmental champions. 57 cluster locations. The initiative has also helped MSMEs reduce carbon emissions and improve occupational health and safety systems through multifaceted interventions including:

▲▲ Workshops on promoting energy efficiency, renewable energy (RE), and clean technology ▲▲ Energy audits of MSMEs ▲▲ Structured Occupational Health and Safety (OHS) interventions, including health camps, first-aid trainings and safety trainings Students geared to face the challenges of future and ▲▲ Empowering MSMEs through financial literacy undertake ‘Green Good Deeds’ after a Sustainable camps, including GST transition support Development Goal (SDG) literacy program

Tree Plantation Initiative YES COMMUNITY activities on the theme ‘Environmental Sustainability’ In line with India's Nationally Determined Contributions (NDCs), YES BANK has committed to develop carbon sink YES BANK has always focused on fostering to help mitigate global warming and climate impact. environmentally conscious citizens. This resulted in 10,700+ YES BANK employees across its branches YES BANK is the first Indian private sector bank to and corporate office supporting the Government collaborate with the National Highways Authority of India of India’s environment campaign, by taking the My (NHAI), and work towards the vision of creating green ‘Green Good Deeds’ Pledge, to help reduce their highways. Under the Ministry of Road Transport and environmental footprint. Highways’ ‘Adopt a Green Highway’ initiative, the Bank has adopted a 40-kilometer stretch along the – The Bank also spearheaded a number of local Nashik Highway. The Bank continues to maintain 45,462 community-led environmental initiatives through its trees along the stretch for a five year period. branch network. On the occasion of World Environment Day 2018, YES BANK joined hands with the National This endeavor would contribute towards achieving India’s Mission for Clean Ganga (NMCG), to conduct a ghat commitment to creating an additional carbon sink of clean-up drive on the banks of the Yamuna river at Kalindi 2.5 to 3 billion tonnes of CO2 equivalent by 2030 and Kunj ghat. Over 250 volunteers from YES BANK and

Annual Report 2018-19 27 NMCG participated in the drive, cleaning over 15 tonnes During the year, the Bank undertook 2,774 monthly of garbage. In Maharashtra, the Bank celebrated Van activities under YES COMMUNITY, touching 2.35 lakh Mahotsav, by joining hands with the local community and lives. Some key YES COMMUNITY programs conducted planting trees in the State government’s 33-acre Hariyali (apart from the ones covered earlier) include: tree plantation site in Navi Mumbai. Health and Wellness Programs During FY 2018-19, YES BANK partnered with and YES BANK branches partnered to celebrate the supported a number of environment-friendly initiatives. Fourth International Yoga Day and promote the The Bank partnered with TATA Power Club Enerji to importance of health and wellness. In partnership with conduct activities across 173 branches on sensitizing the Ministry of Aayush, Government of India, YES BANK students in schools and colleges on ways to save and participated in one of the largest yoga camps in Delhi, conserve energy. YES BANK also supported the e-waste attended by 5,000+ yoga enthusiasts. A similar activity recycling campaign of the Ministry of Electronics and was conducted in Haryana, in association with the District Information Technology (MeitY), Government of India. Administration of Ambala, which witnessed participation The Bank conducted more than 55 awareness building of over 4,000 yoga enthusiasts. sessions across schools, colleges, Resident Welfare Association (RWAs) and Small and Medium-sized Social Welfare & Disaster Relief Initiatives Enterprises (SMEs) for the campaign. The states of Kerala, Assam, Mizoram and Tripura were rampaged by heavy rainfall and flooding in 2018. To contribute towards the disaster relief efforts, employees from over 40 YES BANK branches undertook a material collection drive in partnership with a leading NGO, Goonj. The efforts by YES BANK branches and Goonj contributed to the collection of 250 tons of relief material, benefiting over 12,000 affected families.

Social Transformation The developmental challenges faced by India require innovative and inclusive solutions with a potential to create a multiplier effect, addressing both scale and impact. Towards this, YES BANK through its social development YES COMMUNITY volunteers at the Ghat clean-up drive arm, YES FOUNDATION, adopted a differentiated at Kalindi Kunj Ghat, Delhi approach focusing on stimulating entrepreneurship and building responsible youth citizenship. The initiatives Creating positive impact undertaken by the Foundation aim to address the gaps through YES Community in the development sector by strengthening Design and Innovation-led Creative Entrepreneurship (DICE) solutions, thereby contributing towards building of an empowered and equitable India.

YES! i am the CHANGE Launched as the flagship program of YES FOUNDATION in 2013, YES! i am the CHANGE (YIAC) is a nation-wide mindset transformation program. The program inculcates YES COMMUNITY, YES BANK's unique community the spirit of responsible youth citizenship and drives engagement program, serves as a knowledge exchange positive social action through the impactful medium of and awareness platform for communities around its films. Over the years, this award-winning program has branches on social and environmental issues of local and been recognized as an innovative platform to drive social national importance. change through the application of media. The program acts as a platform to directly engage with youth on social In FY 2018-19, YES COMMUNITY continued its focus on causes. High-quality film content created by participants delivering sustained on-ground impact, in line with the in the program forms invaluable communication material United Nation’s Sustainable Development Goals (SDGs). for non-profits.

28 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

To participate in the program, non-profits, and social enterprises were invited to submit a 3-minute short film showcasing their programs and impact. 714 organizations were then shortlisted to submit written proposals for the Grant & Accelerator program.

Through multi-stage evaluation of proposals, including a jury pitch, 23 organizations have been awarded with grants worth `6.9 crore and selected for the first cohort of the accelerator program. Some of the highlights of 2018 program include:

▲▲ 1,50,000 participants ▲▲ 11,511 film submissions YES! i am the CHANGE Grant & Accelerator ▲▲ 714 organizations shortlisted for project proposal Pitch Jury Panel submission YES! i am the CHANGE Social Filmmaking ▲▲ Top 60 social impact organizations pitched to an Challenge 2018 (Open category) eminent jury panel In 2018, youth and social impact organizations from ▲▲ Top 23 selected social impact organizations across India participated in the social filmmaking awarded grants worth `6.9 crore and 3-year challenge (open category), where they captured the accelerator support. impactful work done by non-profits, social enterprises, and everyday heroes in the form of 3-minute short films. The Challenge received 11,511 film entries from over 1.5 lakh participants across the country.

An eminent jury selected 20 national winners in this category and the winners were awarded cash prizes worth `10 lakh. Social impact organizations featured in the top 714 film entries, were then selected to apply for the YIAC Grant & Accelerator program.

A third-party impact assessment of the first four editions of YES! i am the CHANGE was conducted during the year. The assessment concluded that the program had achieved a mindset transformation among students, NGOs, media professionals and corporates, driving Media for social change fellowship positive and responsible actions towards nation-building. Ahmedabad cohort 2018

YES! i am the CHANGE Grant & Media for Social Change Fellowship Accelerator 2018 The YES FOUNDATION Media for Social Change YES FOUNDATION launched the YES! i am the CHANGE Fellowship was launched in 2016 to further enable Grant & Accelerator for non-profits and social enterprises and deepen social engagement among the youth. to support social impact organizations in creating greater This prestigious Fellowship program helps develop societal value. The program offers grants worth` 7.5 socially conscious youth leadership and amplify crore and three-year acceleration through capacity communication of NGOs to enhance their social impact. building support to 25 organizations with sustainable and scalable programs, addressing India’s development In a short span of three years, the program has transformed challenges. The Yes Foundation Grant and Accelerator 818 students in the age group of 18-25 years into socially Program aims to help existing social impact organizations conscious youth leaders and helped impact 251 NGOs improve quality of operations, adapt to management best across five cities in India, including Mumbai, Delhi, practices, scale up impact and emerge as benchmark Bengaluru, Ahmedabad, and Pune. organizations in the sector.

Annual Report 2018-19 29 The program entails a week-long intensive classroom All Fellows undergo training and mentoring by experts training by industry leaders on leadership, marketing, in Leadership, Communication, Design Innovation and communications, digital and social media, followed by a Creativity-led Entrepreneurship (DICE), and from the social seven-week NGO placement, where Fellow designates and digital media and development sector. This program work on well-defined communication projects. has been instrumental in creating a pipeline of socially conscious youth leaders for the development sector and Some salient features of the program include: substantially enhancing the communication and outreach of social impact organizations. ▲▲ Intensive selection process to induct Fellows with the right passion and determination to make a social difference Employee Payroll Giving ▲▲ Fellows assist in the execution of well-defined NGO YES BANK continues a payroll giving initiative for its projects, with clear objectives and timelines employees. Employees registered under the program contribute a stipulated amount from their salary every ▲▲ Training and NGO placements in five cities: Mumbai, month, toward a cause of their choice from options Delhi, Bengaluru, Ahmedabad, and Pune shared by the partner. In return, the partner sends a ▲▲ Stipend of `10,000 offered for the duration of progress report to the employee with details of impact the Fellowship and a certificate upon successful created through the funds. During the reporting period, completion of the program an amount of `33,93,767 was received as donations from employees. ▲▲ Access to scholarship and internship opportunities on program completion

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INTELLECTUAL CAPITAL Intellectual Capital refers to the collective knowledge base and thought leadership, accumulated through research and policy advocacy, brand management and intellectual property used to support business activities and lead public discourse on global challenges.

ONLY Indian Bank 11 64 To co-found UN Principles for Knowledge reports Advisory mandates executed by Responsible Banking published by YES BANK YES BANK's FASAR team

Thought Leadership Since inception, YES BANK has adopted the ethos of ‘Knowledge Banking’ to provide customized financial products and services, catering to the sunrise sectors of the economy. Dedicated knowledge teams at the Bank undertake in-depth research with an aim to generate insights about these emerging sectors. This differentiated approach has enabled YES BANK to capture the mindshare of critical stakeholders, including regulators, policymakers, industry associations, customers and shareholders. The growing mindshare fuels a corresponding increase in market share across business segments.

The in-house pool of diverse skills and sector-specific expertise enables the Bank to spearhead marquee events as knowledge partners and undertake various ‘industry-first’ initiatives by forging strategic partnerships.

Media and Entertainment, Fine Arts, Food and Agri Business Luxury & Sports Banking Group

Life Sciences and Healthcare Information Technology vv YES BANK E-commerce Knowledge Infrastructure VALSectorsUES

Travel and Tourism Renewable Energy

Strategic Government Advisory Smart Cities

Global Engagement on YES BANK enhanced its knowledge about key sunrise Sustainable Development sectors and forged new alliances and partnerships to accelerate action towards India’s sustainable Given its unprecedented leadership in mobilizing finance development agenda through these platforms. Key events for India’s sustainable sectors, YES BANK is regularly where YES BANK participated during the year include the invited to share its views and insights at various national High-level event on ‘Financing for SDGs - Breaking the and international events. As a thought leader, the Bank Bottlenecks of Investment, from Policy to Impact’ held at participates at these events, alongside experts from United Nations Headquarters in New York; Roundtable governments, select financial institutions, and private and on SDGs by World Benchmarking Alliance & Netherlands institutional investors. Consulate; Second Global RE-INVEST 2018 India-ISA Partnership Renewable Energy Investors Meet & Expo and the 3rd Global Biofin Conference.

Annual Report 2018-19 31 At these forums, YES BANK presented and catalyzed Partnership with United Nations Environment discussions centered around the need for enabling Programme Finance Initiative (UNEP FI) policy architecture, innovative business models, and financial mechanisms to achieve the SDGs. The Bank also advocated the importance of scaling renewable energy investment and the mission critical role of the financial community in increasing finance to meet climate action targets. YES BANK, as the first Indian signatory to the UNEP FI YES BANK remains a signatory to key protocols focused continues to play a leadership role on the platform. on climate action and sustainable development, including the UN Environment Program Finance Initiative (UNEP FI); YES BANK is elected as a member of the 2019 Global Carbon Pricing Leadership Coalition (CPLC); UN Global Steering Committee (GSC) for a three-year term. The role Compact (UNGC); Carbon Disclosure Project (CDP), and of GSC is to provide strategic direction on critical issues the Natural Capital Finance Alliance (NCFA). related to work programs and structural issues. Natural Capital Finance Alliance The Bank has actively collaborated with UNEP FI and 27 other global banks in formulating the ‘Principles for Responsible Banking’. The principles provide a robust roadmap for the banking sector to align its business objectives to SDGs and the Paris Climate Agreement. The principles were launched in November, 2018 at UNEP FI’s Global Roundtable in Paris and the Bank reaffirms its commitment to continued engagement with this initiative.

In 2013, YES BANK became the first Indian signatory to Partnership with Indian Institute of the Natural Capital Declaration (now a part of the Natural Technology, Delhi (IIT-D) Capital Finance Alliance (NCFA), a joint initiative of the YES BANK has been engaging with academic institutions UNEP FI and Global Canopy Programme). active in the areas of sustainability and climate change. In August 2018, YES BANK signed an MoU with IIT Delhi for As a signatory, the Bank remains committed to bringing institutionalizing the YES BANK Chair for climate modeling. together an ecosystem that would help develop The Chair will play an instrumental role in developing an appropriate regulatory infrastructure, disclosure and improving climate modeling methodologies. It will mechanisms, and reporting measures to integrate, further help formulate an India-centric climate model value, and account for natural capital. As the Chair of at the Department of Science and Technology (DST) the Steering Committee of NCFA, YES BANK continues Center of Excellence (COE) in Climate Modeling. As part to oversee NCFA’s strategy and provide direction and of the partnership, YES BANK and IIT Delhi would foster oversight for the Working Groups and the Secretariat. excellence by driving research and development in the In FY 2017-18, NCFA launched a ground-breaking new field of climate change. tool, ‘ENCORE (Exploring Natural Capital Opportunities, Risks and Exposure)’, enabling financial institutions to visualize their exposure to natural capital risk. YES BANK provided feedback during the development phase of the tool and supported the tool at its launch in November, 2018. (More details available in Natural Capital Section on Page 36)

Going forward, the Bank will consider using the tool for gaining insights on the impacts and risks associated with natural capital that would enable better financial decision-making.

YES BANK officials at the signing of the MoU with IIT Delhi, in the presence of the institute’s Director, Prof. V Ramgopal Rao 32 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

World Environment Day 2018 YES BANK actively participated at the World Environment Day 2018 (WED 2018), hosted by the Government of India at Vigyan Bhavan in New Delhi from June 1-5, 2018. WED 2018 witnessed participation from over 10,000 delegates, including government officials, UN agencies, diplomats, corporates, think tanks and research institutes. YES BANK officials were invited to speak at several plenary sessions, organized by the Ministry of Environment, Forest and Climate Change (MoEFCC); Federation of Indian Chambers of Commerce and Industry (FICCI); Central Institute of Plastics Engineering and Technology (CIPET); United Nations Development Programme (UNDP) and the UN Habitat and Swiss Agency for Development & Cooperation. A Tribal Art Forms stall at ▲▲ Innovating Pathways to Sustainable finance in ‘Earth Warriors’ exhibition was also assembled with the India: The report analyses barriers and opportunities support of YES BANK at Vigyan Bhavan during the event. in mobilizing sustainable finance in India, serving as a keystone towards formalizing a sustainable The Bank launched a first-of-its-kind green retail product finance architecture in India. ‘Green Future: Deposit’ and the 4th edition of the ▲▲ Electric Vehicles: The Colour is Green: The report YES BANK Natural Capital Awards 2018 during a ‘Natural covers key proposals and recommendations for Capital in India’ workshop. The event was organized by accelerating the shift from Internal Combustion the Natural Capital Coalition (NCC), the Confederation of Engines (ICE) to a future of e-mobility. Indian Industry (CII) and the World Wildlife Fund (WWF). The Bank also organized a Yamuna Clean-up Drive, in ▲▲ Renewable Energy: India’s Energy Game Changer: partnership with the National Mission for Clean Ganga The report analyzes the current landscape of the (NMCG), under its community engagement platform, global renewable energy sector, with a special focus YES Community at Kalindi Kunj Ghat in New Delhi. on opportunities in India and the role of startups.

Knowledge Reports Food & Agribusiness Strategic Advisory & Research (FASAR) As a thought leader on sustainability-centric sectors, YES BANK’s specialized Food & Agribusiness Strategic YES BANK launched a number of knowledge reports Advisory & Research (FASAR) unit provides project, policy, in FY 2018-19 advancing the understanding of and strategic advisory services to the corporate sector, climate-related risks and opportunities. Some of them are: governments, and multilateral agencies.

Annual Report 2018-19 33 FASAR also publishes knowledge reports and research ▲▲ Mandated to develop Knowledge Report on Dholera papers on key trends and developments in the sector. Industrial Smart City ‘Dholera Industrial City – New Age Destination for Industry 4.0’ by Dholera In FY 2018-19, FASAR took up 64 new advisory mandates Industrial Development Corporation (DIDCL) and executed projects on agri infrastructure, export policy, ▲▲ Developing the State Logistics Policy for the agritech, value chains, food processing, food safety, Governments of Karnataka and Telangana organic food, startups, spices and dairy. Events & Partnerships Groundwork by the FASAR team in collaboration with ▲▲ Banking Partner to the Maharashtra Startup Week the Ministry of Commerce & Agricultural and Processed 2018, Vibrant Gujarat Startup Summit 2018 and Food Products Export Development Authority (APEDA) Destination Investors Summit 2018 led to the development of the ‘Agriculture Export Policy, 2018’. The policy was approved by the Union Cabinet in ▲▲ Knowledge Partner for flagship tourism events of December, 2018. During FY 2018-19, FASAR released FICCI: The Great Indian Travel Bazaar 2018 and several publications spanning innovations in Indian Tourism Investors Meet 2018 agriculture, startups, spices, cold chain storage, organic ▲▲ Knowledge Partner for 14th edition of CII MAN’EXE and horticulture segments, among others, partnering with 2018, a flagship conference on Manufacturing the Government of India and various industry stakeholders. Excellence Strategic Government Advisory (SGA) ▲▲ Representation as sector thought leader during the session on ‘Tourism Investment’ during Make in A specialized ‘Strategic Government Advisory (SGA)’ Odisha Conclave 2018 group has been created within YES BANK to actualize its ▲▲ Representation as sectoral thought leader during focus and commitment for holistic development of the key the session on ‘Warehousing & Logistics: Investing and emerging sectors of India’s economy. The objective in Tamil Nadu’ during Tamil Nadu Global Investors of SGA is to enable creation and deepening of banking Meet 2019 opportunities and strengthen mindshare for the Bank by executing knowledge and advisory mandates with Knowledge reports authored during central & state governments; corporates; international FY 2018-19 include: developmental institutions; multilateral bodies; industry ▲▲ Inbound Tourism: Decoding Strategies for Next chambers; knowledge institutions and think tanks, Stage of Growth among others. SGA offers advisory services, thought leadership and development support across sectors, ▲▲ Tourism Infrastructure Investments: Leveraging including Infrastructure – Smart Cities & E-Mobility, Partnerships for Exponential Growth Tourism & Hospitality, Healthcare & Wellness and ▲▲ Smart Logistics: The Next Frontier Education among others. ▲▲ Advanced Manufacturing Technologies: Next Wave Some of the key achievements include: in Manufacturing Policy & Strategic Advisory ▲▲ Development of State Policies for Tourism and AYUSH sectors for the Government of Uttarakhand ▲▲ Mandated to develop Punjab Electric Vehicle Policy by Department of Transport, Government of Punjab ▲▲ Mandated to develop Tourism Policy for the Union Territory of Diu and Daman by its tourism department

34 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

Business Economics Banking (BEB) Indian economy continues to chart a path of healthy economic growth, amid an ever-changing global economic order. A lucid and comprehensive understanding of all trends and nuances of the Indian economy is imperative for the Bank. Towards this, Business Economics Banking (BEB) is the research and knowledge-driven team of YES BANK, which provides authoritative, cutting-edge macro/markets outlook and sector-specific research content, for both external and internal consumption. The team aims to further deepen YES BANK’s mindshare, through active participation in client meetings and industry engagements.

Smt. Vasundhara Raje, Former Chief Minister of Rajasthan, releasing the YES BANK – FICCI Knowledge Report ‘Inbound Tourism: Decoding Strategies for Next Stage of Growth’ in presence of Smt. Rashmi Verma, Former Secretary, Ministry of Tourism, Government of India and Shri Bhupesh Rathore, President & Head, Strategic Government Advisory, YES BANK during The Great Indian Travel Bazaar 2018

The BEB team publishes periodic reports of evolving In 2018-19, BEB shared its outlook on Indian economy macroeconomic data and thematic reports on key and impact on businesses at several events such as economic trends. Over the years, primary research and BSE’s India Foundation: India Economic Summit 2018; reports published by BEB have been referred to and MCCI India Economic Forum; Annual Economics Lecture cited by key stakeholders, including the Government, at IOCL, Delhi; L&T Financial Risk Management Workshop; global investors, media and top clients. As a validation for SIAM 13th Looking Ahead Conclave and Economist its expertise, the team won the ‘Reuters Most Accurate Huddle NITI Aayog, among others. Forecaster Award’ for 2016 for India’s economy and continues to remain among the top three forecasters according to Bloomberg rankings.

Annual Report 2018-19 35 NATURAL CAPITAL Natural capital refers to all renewable and non-renewable environmental resources that the Bank uses to create stakeholder value. It also includes the finance it mobilizes to promote natural resource preservation and climate risk mitigation. 2,705 MW 11.38% 744 Capacity RE projects Reduction of GHG ISO 14001:2015 certified sanctioned Emission Intensity green facilities

Natural capital has always been a critical focus area at areas such as energy efficiency, renewable energy and YES BANK. Guided by its ethos of Responsible Banking, gender financing. the Bank has always endeavored to be conscious and responsible in minimizing its use of natural resources Renewable Energy Lending & Advisory and impact on natural ecosystems. Its focus on natural Government of India has expanded its Renewable Energy capital conservation and climate action has led the Bank (RE) capacity target to 175 GW by 2022. Aligning itself to garner one of the largest renewable energy lending to Government policies, YES BANK has sanctioned credit portfolios among private-sector banks. The Bank has also for establishing RE projects of capacity 2,705 MW for taken a lead in reducing carbon footprint, becoming the FY 2018-19. RE projects sanctioned during the year are first Indian bank to be ISO 14001:2015 certified for its broadly categorized as: robust Environmental Management System. Additionally, YES BANK has been at the forefront of mainstreaming the protection and conservation of India’s rich natural capital by becoming the first Indian signatory to the Natural Solar 550 Capital Declaration; the first Indian Bank to join the Wind 955 Natural Capital Coalition (NCC); and a founder member of the UNEP FI Principles for Responsible Banking. Integrated 1,200 Renewable Energy Projects Positive Impact Finance YES BANK believes that Financial Institutions (FI) can play a major role in driving climate action by adopting Powering Solar Projects proactive approaches towards climate finance. The Bank is an associate organization that supports the International Solar Alliance (ISA). In FY 2017-18, the Bank The Bank’s holistic climate strategy encompasses the committed to mobilize USD 1 billion till 2023 and USD 5 launch of innovative green financial mechanisms, the billion till 2030 toward financing solar energy projects in integration of sustainability principles into operations, India. YES BANK is on track to meet this commitment and and establishing its credentials as a green bank among already financed USD 1.75 billion in FY 2018-19. sustainability-focused investors. During FY 2018-19, the Bank’s key transactions to In February 2015, YES BANK committed to mobilize USD support sustainable use of natural capital included: 5 billion toward climate action till 2020, with specific sector-wise targets. The Bank has already surpassed ▲▲ Underwriting of term debt of `337.5 crore along its target of financing 5 GW of Renewable Energy (RE) with Letter of Credit (LC) / Stand By Letter of Credit projects, by an additional 1.8 GW. (SBLC) sublimits for 100 MW solar project in Bhadla Solar Park, Rajasthan With an aim to mainstream sustainable finance, YES BANK ▲▲ Underwriting of term debt of `4,711.3 crore along has, over the years, developed long-term partnerships with Letter of Credit (LC) / Stand By Letter of Credit with leading global development financial institutions (SBLC) sublimits for 1,200 MW pump storage plant such as International Finance Corporation; Overseas in Andhra Pradesh (part of Integrated Renewable Private Investment Corporation; Asian Development Bank; Energy Project) Netherlands Development Finance Company (FMO); Development Bank of Austria (OeEB) and European ▲▲ Underwriting of term debt of `807 crore along with Investment Bank, among others. These partnerships LC sub-limits for 200 MW solar project being setup help the Bank in promoting financing opportunities in in Bhadla Solar Park, Rajasthan

36 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

▲▲ Underwriting of term debt of `170 crore along with Environment and Social Policy (ESP) LC sub-limit for 30 MW wind project being setup in YES BANK believes that it is critical for banks to have an Gujarat established framework to recognize, evaluate, monitor, ▲▲ Underwriting of term debt of `600 crore along with and manage the environmental and social elements in its LC sub-limit for 200 MW solar project being setup in day-to-day decision-making. It is becoming increasingly Bhadla Solar Park, Rajasthan imperative for banks to consider the ‘sustainability dimension’ while making credit decisions. In line ▲▲ Underwriting of term debt of `1,328 crore along with with its Responsible Banking strategy and practices, LC sub-limit for 250 MW wind project being setup YES BANK has been adopting a precautionary approach in Gujarat to environmental and social impacts, resulting from its ▲▲ Non-Fund based (LC) facility of `1,234 crore toward lending activities. The Bank’s Environment and Social procurement of equipment for 250 MW wind project Policy (ESP), implemented in 2006, provides a structured in Gujarat approach towards responsible lending. ▲▲ Refinancing of` 2,313.6 crore term debt for 365 MW The ESP is an integral part of the Bank’s Environment operational wind projects & 50 MW operational & Social Management System (ESMS). It sets out solar project under 7 special purpose vehicles and an overarching framework for the identification and additional top-up term debt of `467 crore for further management of potential and/or existing Environmental capital expenditure and Social (E&S) risks commensurate with the nature ▲▲ Underwriting of term debt of `228.5 crore for and scale of transactions and their potential impacts. 60 MW wind project to be implemented in Rajasthan Through this policy, the Bank integrates environmental and social risks into its overall credit risk assessment Sustainable Investment Banking architecture, which goes beyond the realm of financial risk mitigation. It has voluntarily adopted the policy, based on Sustainable Investment Banking (SIB) is a international frameworks such as the Equator Principles knowledge-focused vertical at YES BANK. It provides and IFC guidelines. The ESP is a crucial part of the Bank’s investment banking and advisory services in the credit risk appraisal process and the Bank further continues sustainability space, including renewable energy, clean to mainstream environment and social consideration technology, environmental services, healthcare, and across its lending through strengthening ESP integration education. SIB specializes in private equity fund with overall credit risk assessment structure. raising, mergers & acquisitions, technology transfer, business advisory and corporate restructuring, among others. It has successfully completed 36 transactions, Achieving operational amounting to a transaction value of over USD 7.5 billion. environmental excellence During the reporting period, SIB successfully closed the In 2014, YES BANK became the first bank in India to following transactions: receive the ISO 14001:2004 certification for bringing down resource usage, waste generation & disposal costs, ▲▲ Acted as an exclusive advisor to SREI Infrastructure energy consumption, and implementing environment Finance Limited for sale of their 60 MW wind friendly practices. In 2017, YES BANK became the first portfolio to ReNew Power Limited bank globally to migrate to the ISO 14001:2015 standard ▲▲ Acted as an exclusive advisor to Kiran Energy Solar for its Environmental Management System (EMS). The latest Power Private Limited for sale of their 85 MW solar ISO 14001:2015 standard further expands the scope of portfolio to Hinduja Group the Bank’s commitment to the environment through a greater emphasis by leaders to implement EMS, a better ▲▲ Exclusive buy side advisor to Nayati Healthcare strategic fit to incorporate environmental risk mitigation, Group for its acquisition of OSL Healthcare (600 bed integrating environmental impacts in Life Cycle Thinking, under-construction hospital in Gurugram & 75 bed and driving effective internal and external stakeholder operational hospital in South Delhi) and SLJ Hospital communication. As on March 31, 2019, YES BANK is (200 bed hospital in North Delhi) leading the BFSI sector globally with the highest number of ISO 14001 certified green facilities with 744 certified SIB represented YES BANK’s strong sector expertise locations, including 4 corporate offices, YES Securities and thought leadership in the renewable energy and and the Abu Dhabi Representative Office. This marks the sustainability sectors at key conferences and seminars latest milestone achieved by the Bank in its journey in like RE Assets India 2019. becoming a leading environmentally friendly bank.

Annual Report 2018-19 37 YES BANK is committed to continuously benchmark and potential use of ~70,380 A4 sheets of paper enhance its environmental performance through strategic ▲▲ YES BOTS: YES BANK has digitized Electricity Bill reduction of its carbon footprint intensity in order to fulfil its Payments processing using Artificial Intelligence environmental obligations and stakeholder expectations (AI) Enabled BOTS. This new platform is being used towards supporting sustainable growth. across YBL branches pan India to raise and process electricity payments to be made to DISCOMS. Key Digital & Paperless Banking features include online approval workflow, timely processing eliminating manual errors/omissions The Bank continued its efforts to gradually move towards with centralized repository for easy tracking of claim paperless banking, by digitizing paper-based products status and more importantly moving away from and processes, wherever possible. Its key initiatives paper documentation. The initiative, operational during the year included: since November 2018, has resulted in total paper savings of 26,250 A4 size sheets ▲▲ E-Letters: The Bank launched the service of E-letters for Retail Asset Products. This has enhanced the ▲▲ YES PAYMENTS: The Bank has digitized employee service quality moving into digital platform & to reimbursement claims, such as mobile phone, local provide seamless customer experience. It has conveyance, outstation travel, staff relocation, significantly reduced the turnaround time from 3 through an internal YES PAYMENTS platform. days to 1 day, thus also avoiding the potential use of The initiative in FY 2018-19 has resulted in total ~2,18,351 A4 sheets of paper and 90,797 envelops paper savings of approximately 3,95,005 A4 size in FY 2018-19 sheets through online mobile & local conveyance reimbursements ▲▲ Digital Post Disbursal Documents (PDD): The Bank launched the YES PDD application, in collaboration ▲▲ Employee Self-Service (ESS) Portal: In line with with Bank’s outsourced partner, aiming to reduce the HCM Digitalization roadmap which leverages paper used in post disbursal documents copies innovation, automation and continuous process through digitization of documentation and improvements to deliver superior experience verification. It has saved over 1,77,750 sheets of and drive efficiency & engagement, YES BANK A4 size paper in the Bank’s retail operations in FY implemented the enhanced process for submission 2018-19 of Investment proofs & LTA reimbursement process. ▲▲ Launch of DIGI LAS and INF: In FY 2018-19, Bank The new process incorporates changes in terms has simplified its loan account opening process of online submission of proofs through ESS Portal. and launched DIGI LAS and Inventory Funding (INF) This program aims to reduce paper work, delay in process which has resulted in: receiving the documents by courier, reduction in ▲▲ Online viewing of statement of account for manual tracking of documents and adds value to inventory funding employee experience. The initiative in FY 2018‑19 has resulted in total paper savings of 85,000 ▲▲ Customized documents as per different facility A4 size sheets. type & constitution for inventory funding ▲▲ Minimising customer signatures on agreement for Reduce, Reuse and Recycle loan against securities During the year, the Bank continued its focused efforts ▲▲ Auto population based on single data source in in resource consumption reduction and has recycled multiple documentation 8.5 tonnes of dry waste resulting in 11.33 MT of carbon footprint reduction. ▲▲ Document Digitization: The initiative, in collaboration with the Bank’s partner NEWGEN, Managing E-Waste aims to reduce paper used in account opening and verification forms through digitization of Owing to its high dependency on technology, E-waste is a documentation and verification. It has saved over primary environmental concern for YES BANK. Thus, the 75,000 sheets of A4 size paper in the Bank’s retail Bank has empanelled Pollution Control Board authorized operations in FY 2018-19 third-party e-waste handlers for disposal of e-waste from its locations across India. During FY 2018-19, the Bank ▲▲ Click to Happiness: The Bank’s digital personal responsibly disposed 1,658 kg of assets as e-waste, loan system for employees processed 782 loan which included desktops, printers and laptop hardware, applications in FY 2018-19, thus avoiding the UPS, and server hardware.

38 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

Infrastructure – Key Steps to Enhance friendly coolants, thus reducing its environmental Resource & Energy Conservation footprint, which have potential saving of 10 to 15 % YES BANK has been increasing investments in technology ▲▲ The Bank is in the process of phasing out signages to renew existing infrastructure, improve performance using tube-lights with energy efficient LED’s which and enhance resource & energy efficiency. have potential saving of 20 to 25 %. In FY 2018-19, it has been completed across 70 branches ▲▲ The Bank has been migrating to LED lighting in ▲▲ YES BANK’s energy management initiatives phases. In present financial year 3,592 LED units aim at reducing 15-20% energy consumption by have been replaced, potentially saving annual introducing Energy management system, wherein energy of 20,775 KW the consumption will be monitored centrally using IoT ▲▲ The Bank is in the process of phasing out ▲▲ YES BANK has explored the potential of using air‑conditioning systems that use ozone depleting alternate sources of energy by installing 5 KVA coolants, and in the current reporting cycle, the solar system at Pune Bundh garden branch, which Bank has initiated the process to replace all air has a potential to generate 7,200 units annually. conditioners that are more than 10 years old with YES BANK would continue to explore alternative energy efficient (star rated) systems that use eco- sources of energy in future

YES BANK GHG Inventory FY 2018-19 FY 2017-18 FY 2016-17 # Scope 1 – Diesel (tCO2e) 905.38 921.03 942.44 Diesel Consumption (Litre) 342,345.83 348,263.61 356,359.05 # Scope 1 – Refrigerant (tCO2e) 2,172.92 2,059.04 1,349.30 ## Scope 2 – Emission (tCO2e) 30,453.16 29,668.27 34,226.39 Grid Electricity Consumption (MWh) 37,138.00 36,180.82 41,739.50

Total Emission (Scope 1+2) (tCO2e) 33,531.46 32,648.34 36,518.13 Total FTE as on March 31, 2019 21,136 18,238 20,125

Emission Intensity (tCO2e/FTE) 1.59 1.79 1.81 % Reduction of Emission Intensity YoY 11.38 1.35 16.50 45,823.67### Total Scope 3 Emissions (tCO2e) 4,420.89* 2,642.23*

# Scope 1 emissions include 10% refrigerant leakage from the AC systems. The emission factors and GWP (Global Warming Potential) values have been taken from GHG protocol. The cost of diesel consumed pan bank is converted in quantities consumed by using state-level diesel prices. Like 2012-13 (base year), we have used operational control approach for measuring and managing these emissions. ## Grid Electricity Consumed has been calculated from the electricity bills. Scope 2 emissions includes negligible emissions generated by electricity consumption by YES Securities Ltd., a subsidiary, since it is operating out of same NOC Mumbai building premises, and currency chests. ### In addition to business air travels, this year, emissions through daily commute by employees, paper consumption, couriers (assuming 1 envelope and 1 A4 paper per courier), and electricity consumption at outsourced data centres are also included in Scope 3 emissions. *Scope 3 for FY 2018 & 2017 constituted business air travels only. Note: Scope 2 emissions include CO2 emissions from electricity consumed by YES BANK. The emission factors have been taken from CEA’s (Central Electrical Authority) CO2 database, version 13. The cost of electricity consumed pan bank is converted in quantities of electricity consumed by using state level tariffs, wherever required. Like 2012-13 (base year), we have used operational control approach for measuring and managing these emissions. As a service sector organization, the Bank is reporting specific GHG intensity covering its Scope 1 and Scope 2 emissions, which comprise its significant energy usage, linked with GRI Standard 305 requirements. Given the disclosure, the Bank does not separately report the energy intensity.

Water Footprint IS 1172:1993-Code of Basic Requirements for Water Supply, Drainage And Sanitation) the Bank has estimated Considering the nature of the Bank’s business and that in 2018-19, the water consumption at all its facilities locations it operates in, there are no significant negative was approximately 235,510.695 m3* in 2018-19. impacts on the communities around its areas of operation, The Bank encourages branches to lead their own and the Bank’s primary consumption of water is for mitigation initiatives and shares best practices across drinking and municipal purposes. other branches. * Estimated number of working days per employee calculated excluding Based on the assumption that approximately 45 litres weekends, annual leaves, public holidays and averaged sick leaves of water is consumed per employee per day (Source:

Annual Report 2018-19 39 CLIMATE DISCLOSURE Natural Capital Awards 2018 The 4th edition of YES BANK’s Natural Capital Awards was announced on World Environment Day at Natural Capital Forum organized by Natural Capital Coalition (NCC), World Wildlife Fund (WWF), and YES BANK. Launched in 2013, the awards platform has been instrumental in mainstreaming the natural capital dialogue YES BANK was the first Indian banking signatory to in India by showcasing best practices in natural capital the CDP and has been reporting its carbon emissions consumption, accounting mechanisms, and conservation since 2009. Backed by its enhanced disclosures on within industry, academia, and civil society. The platform emissions and backed by a clear climate action strategy, went beyond its core objectives of recognizing leaders the Bank has been recognized as a Climate Disclosures in the natural capital domain and brought together Leader consistently. like-minded stalwarts from various stakeholder groups. YES BANK, is a strong proponent of ESG disclosures, This edition of the Natural Capital Awards ceremony was and welcomes the recommendations on climate the Bank’s first carbon neutral event and was organized related financial disclosures by TCFD. In June 2018, in partnership with the Ministry of Environment, Forest & YES BANK became the first Indian Bank to release Climate Change (MoEFCC), Ministry for Development of enhanced sustainability disclosures aligned to TCFD North Eastern Region (DoNER) and National Mission for recommendations Clean Ganga (NMCG), in New Delhi. As partners for the awards, State Governments of Arunachal Pradesh, Assam, and Sikkim and Embassies of France, the Netherlands, Spain, and Switzerland shared their experiences on the policy aspect of natural capital. The award ceremony saw insightful dialogues from high-level dignitaries Natural Capital Risks & Opportunities such as H.E. Mr. Marten van den Berg, Ambassador of the Netherlands to India; H.E. Mr. José Ramón Barañano Fernández; Ambassador of Spain to India; H.E. Mr. Andreas Baum, Ambassador of Switzerland to India; Mr. Rajiv Ranjan Mishra, Director General, National Mission for Clean Ganga; Mr. John Lelliott OBE, Chairman, Board of Directors, Natural Capital Coalition; Mr. Kamal Singh, Executive Director, UN Global Compact Network India and After having supported the development of the Natural Mr. James Newcomb, Managing Director, Rocky Mountain Capital Protocol’s (NCP) Finance Sector Supplement (FSS), Institute, among others. It also saw participation from YES BANK applied the Supplement on its green bonds governments, various industries, wildlife conservationists, to study their alignment to natural capital concerns and photographers, civil societies, academia, and multilateral measure the impact and dependencies of the projects agencies. Mr. Suresh Prabhu, Hon’ble Minister for funded by these bonds. The Protocol was also used to Commerce & Industry and Civil Aviation, addressed the understand the risks and opportunities arising from their august gathering through a video message highlighting use and investment of the proceeds. the importance of natural capital.

It was established that policies and processes put in In 2018, the awards witnessed an overwhelming place to mitigate natural capital risks that may arise participation from individuals, with more than 38,832 from the projects’ operations, are adequate. The Green photograph submissions and 760 organization entries Bonds are also aligned with NCP FSS to a high degree. across the six categories. Third-party evaluation was The green projects funded by the proceeds of Green carried out by program partners, and an esteemed jury Bonds issued by YES BANK will annually generate around comprising nature conservationists, photographers, 2.35 million Mwh of electricity, which is equivalent to the environmentalists, industry stalwarts, sustainability volume of electricity required to light up around 2.32 professionals and experts from multilateral agencies million households in India, in a year. To read more on chose the final winners. Mr. Pawan Kumar Chamling, the detailed impact, please refer to pages 116-117 in this Hon’ble Chief Minister of Sikkim, was awarded the ‘Nature annual report. Leader of the Year’ for his contribution toward natural capital in Sikkim.

40 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

As a run up to Natural Capital Awards, YES BANK together then Head of UN India, Mr. Yuri Afanasiev, the roundtable with United Nations (India) organized a roundtable on was attended by development financial institutions, ‘Mobilizing Sustainable Finance in India’, at the United investors, government and stock exchanges, among Nations (UN) Headquarters in New Delhi. Chaired by the several other industry leaders.

The winner of Trailblazer category being felicitated by (L-R) Mr. Nikhil Sahni, Group President, Multinational Corporate Banking, Government Banking, Strategic Government Advisory and Food and Agri Strategic Advisory and Research, Ms. Namita Vikas, Group President and Global Head, Climate Strategy & Responsible Banking, Mr. Rajiv Ranjan Mishra, Director General, National Mission for Clean Ganga, Mr. Pierre Jacquet, President, Global Development Network, Mr. James Newcomb, Managing Director, Rocky Mountain Institute, Mr. John Lelliott OBE, Chairman, Board of Directors, Natural Capital Coalition

(L-R) Winning photos by Baiju Patil, Nikhil Tembekar, Narendra Kumar Pandey

Annual Report 2018-19 41 HUMAN CAPITAL Human capital refers to the value of employees’ competencies, their motivations to innovate, their knowledge and experience and their capability to utilize these to meet stakeholder needs. It also includes development programs undertaken for employees.

21,136 709,174 5,410 16,132 Total Employees Training hours Training programs Employees trained

YES BANK’s human capital philosophy focuses on creating Redressal) Act & Rules, 2013’. G.R.A.C.E. also reaffirms the right mind-set to enable business performance, by the Bank’s commitment to being an equal opportunity empowering and encouraging YES BANKers to push their employer. The Bank has internal committees to investigate boundaries beyond their comfort zones, and embrace and inquire into sexual harassment complaints in line challenges and drive growth, thereby deepening mind with The Sexual Harassment of Women at Workplace share and enhancing market share. (Prevention, Prohibition & Redressal) Act, 2013.

YES BANK follows the 5C Engagement Model comprising Women-Centric Initiatives Culture, Communication, Career, Connect, and Care to Maternity benefits: The Bank provides maternity benefit of engage its growing workforce. 26 weeks to female executives to celebrate motherhood and bonding. In addition, to celebrate the special Human Capital Initiatives moments of motherhood, the Bank presents gift vouchers for the newborns to all new mothers resuming duty post YES CLUB maternity leave. The Bank provides equal opportunity YES CLUB was launched across the Bank’s hub branches to female executives during maternity period and on with the objective of encouraging an atmosphere of fun resuming duty post maternity, Crèche Benefit Policy for and camaraderie and provide YES BANKers a platform women executives are provided as per the provision of to showcase their talent and creativity. It facilitates the Maternity Benefit Act, 1961. participation in activities around three broad themes: social, cultural and sports. Rewards and Recognition: YES League of Excellence Since its launch in FY 2017-18, YES BANKers across Rewards and Recognition is driven digitally through an the Bank’s 262 hub branches have organized and online portal called the ‘YES LEAGUE OF EXCELLENCE’. participated in activities such as sports tournaments, It provides a formal recognition platform to recognize adventure sports and trekking, arts and crafts exhibitions, and reward excellence at YES BANK and in turn create photography contests and employee volunteering a ‘Culture of Appreciation’. All YES BANKers have the activities. YES CLUB is also the primary driver of initiatives option to appreciate and wish their colleagues on focused on building a culture of holistic well-being achievements or occasions. Reporting managers can among YES BANKers. Under this agenda, several nominate team members for rewards such as Y-Star of wellness-focused activities such as medical screening the month (Employee of the Month), basis performance. camps; health talks in partnership with reputed medical (Refer Award Categories chart) institutions; wellness knowledge campaigns; workshops on emotional well-being, meditation, stress management, Employee Performance Management Yoga, Zumba; and functional training sessions like chair yoga and chair cardio are undertaken. The Bank manages the performance of executives, ensuring timely, unbiased and transparent appraisal Encouraging Gender Respect: Say process for all executives. The Bank follows an annual YES to G.R.A.C.E performance review cycle, with eligible executives undergoing a multi-level performance valuation. The Bank Through the robust ‘Say YES to G.R.A.C.E’ (Gender evaluates performance purely on merit. Respect and Commitment to Equality), framework, the Bank creates awareness while periodically disseminating Awards and Accolades and reiterating the Bank’s Policy for Prevention of Sexual Harassment, which is in line with ‘The Sexual Harassment ▲▲ YES BANK has been awarded the coveted ‘Golden of Women at Workplace (Prevention, Prohibition and Peacock National Training Award’ in April 2018 at

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AWARD CATEGORIES

1,631

624

288 129 28

SPOT ON Y-Star of Team of Rising Star of YES Personality the Month Quarter the Quarter

the ‘28th World Congress on Leadership for Business employees to address all HCM related enquiries. Excellence & Innovation’ & Golden Peacock Awards, An Employee Query Management System (EQMS) was organized by Institute of Directors (IOD) in Dubai. also launched to leverage technologies and further The Award identifies excellence in training practices; enhance HCM service delivery through structured and shows how effective training improves business & timely query resolution. individual performance and provides role models from all parts of Indian corporate life. During FY 2018-19, YES Bot, an AI-enabled ChatBot for instant employee query resolution was implemented. ▲▲ YES BANK has been awarded the No.1 ‘Dream The Bot has also been integrated with YES for YOU Company to Work For & Best Employer of the Year’ Mobile (HCM App) for a single touch access. at the 27th World HRD Congress held in Mumbai in Feb 2019 after a rigorous multi-stage selection HCM HelpDesk aims at providing employees a direct process among 800 participating companies. access to the Bank’s HCM team. The charts below depict ▲▲ YES BANK Transformation Series 2018 won the the extensive use of the tool for various categories award for the Fourth Most Prestigious B-School for FY 2018-19. Competitions in March 2019. This award was presented by Dare2Compete in association with TOTAL NO. OF QUERIES (NOS.) CNBC TV18. Listening to Employees ‘HCM HelpDesk’ was designed in line with the Bank’s 3,824 objective to provide a consistent and superior service experience to its employees. It is a simple and easy-to-use platform that allows employees to raise all HCM-related 2,536 (Human Capital Management) queries and concerns 2,224 through email, voice call (Interactive Voice Response), ChatBot and a query management system. The platform 1,555 then offers satisfactory closure to these concerns.

A unique toll-free Interactive Voice Response (HCM IVR) facility (1800 2000 515) was launched for all YES BANKers, as part of the Bank’s continued efforts to improve human capital service delivery. It enables QI QII QIII QIV

Annual Report 2018-19 43 COUNT OF CATEGORY QUERIES – CATEGORY-WISE DISTRIBUTION

234 3 320 112 3 113 20 26 444 362

2,803 1,920

QI QII

1 86 15 37 1 23 19 576 377

1,537 1,107

QIII QIV

Benefits HCM Policy Salary & Reimbursements HRMS Non-HCM Others

Learning & Development YES School of Banking is the only Learning & Development function in India to be accredited with the latest Dual ISO YES School of Banking (YSB) Certification (ISO 9001:2015 and ISO 29990:2010).

My Learning@YES My Learning @ YES, the Bank’s online Learning Management System (LMS) in partnership with Cornerstone On Demand, supports digital learning and class room sessions. MY LEARNING @ YES provides learners increased access In today’s disruptive digital era, it is critical to build a to learning content (in-house courses and externally high-quality, robust talent pool with adaptability skills integrated content partner like Coursera), learning for the changing needs of the workplace for a sustained scorecards measure actualization against learning path competitive advantage. YES BANK has always emphasized and assign learning credits to learners. The system also on a knowledge-driven approach for visualizing the has the capability of social learning, advanced reporting & future and bringing that future to the present. It focuses analytics, conducting and managing classroom trainings, on developing the capacity and capability to nurture the attendance tracking and training schedule management in brightest and best quality talent. This is the cornerstone addition to accessing the e-learning modules. The LMS also of YES BANK’s evolution as the ‘Professionals Bank of has a mobile first approach enabling learning on the go, India’. Key Human Capital, organizational development allowing users to go through modules and appear for tests and learning initiatives at YES BANK are domiciled from the app ensuring better time utilization. Additionally, under the aegis of YES SCHOOL OF BANKING (YSB). the system has features like a versatile training calendar, Institutionalized in 2007, YSB was created with a vision training schedule management, feedback mechanism and to build a ‘Centre of Excellence’ for learning solutions in management information system. banking and related areas.

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Major Learning Modules Some of the major learning modules initiated by the YES School of Banking are:

RBI - Regulatory / Compliance Mandatory Programs 1. RBI Mandate ▲▲ RBI Capacity Building in Banks and All India Financial Institutions (AIFIs) ▲▲ Institute for Development and Research in Banking Technology (IDRBT) Certifications for Board of Directors, CXOs, and select Top/Senior Management 2. Risk Management trainings ▲▲ Credit Skills Assessment – CRISIL ▲▲ Exposure to best-in-class industry knowledge and subject matter expertise: Centre for Advanced Financial Research and Learning (CAFRAL), National Institute of Bank Management (NIBM), National Institute of Securities Markets (NISM), College of Agricultural Banking (CAB), Indian Institute of Banking and Finance (IIBF), Foreign Exchange Dealers Association of India (FEDAI) and Fixed Income Money Market and Derivatives Association of India (FIMMDA), among others.

3. Compliance Initiatives ▲▲ RBI Master Circulars (classroom + e-learning) ▲▲ Supervisory Programme for Assessment of Risk and Capital/ Risk Based Supervision/ Governance sessions ▲▲ Infosec / Business continuity planning / Operational Risk Management / Enterprise risk management trainings

SUPERCOP (Super Certified Operations Professional) Certification SUPERCOP is a ‘gold standard operations certification’ for select YES BANKers from Operations Service Delivery (OSD) team. It aims to create an elite team of cross-functional experts who understand and manage end-to-end operations. The program encompasses cross-functional training across critical operations roles, external certifications, service orientation, leadership training, design thinking and innovation workshop, and exposure to professional-technology programs to hone the participants’ skills for future.

Relationship Manager (RM) Training Certification Roadmap A one-year certification program was launched for relationship managers of Corporate Businesses to become a well-rounded ‘knowledge banker’. The program is conducted across locations with several training interventions, which are mentioned below: 1. STEP-UP Series – a unique onboarding program 2. Winning Through Sales & Negotiations 3. Credit Skills Assessment and Report Writing – through CRISIL 4. Sector-Specific Knowledge Sessions by Industry experts from CRISIL, ICRA and others 5. Product Boot Camps

Annual Report 2018-19 45 Professional Technology Programs (PTP) YES BANK organized a series of training interventions under the ‘Professional Technology Programs’ umbrella to enhance YES BANKers’ ‘digital quotient’, to help them remain relevant in changing times and be ‘future-ready’. The programs have resulted in: ▲▲ Increased awareness, appreciation and application of the emerging technologies disrupting the banking eco-system ▲▲ Contributed significantly in offering various differentiated digital financial solutions to corporate and retail customers ▲▲ Enhanced knowledge by gaining access to best-in-class learning through a blended-learning approach by partnering with NIIT, COURSERA and FinTech

Leadership and Behavioural programs – Pan Bank 1. Advanced Leadership Program (ALP): The Bank successfully concluded its first ever leadership development journey (in partnership with Eruditus Executive Education) towards building holistic and future ready leaders across Top and Senior Management (97 participants). The program provided an immersive and experiential learning journey spread over a period of 6 month across online and classroom modules (4 modules, 2 days per module), each one focussing on a specific organisational priority as follows: ▲▲ Collaboration and Creativity ▲▲ Leading Self ▲▲ Leading People ▲▲ Leading Change The program was concluded in the presence of the Bank’s Top Management. The participants were also addressed by the MD & CEO. The program was highly rated both by the participants and the leaders of the participant’s team. 2. Leadership Development Interventions for Middle Management: Following the success of leadership development initiatives for the Bank’s senior leaders in FY 18-19, 2 exclusive programs for Middle Management leaders were rolled out during Q4. Managers leading teams and handling significant business responsibilities were targeted for these programs. The programs were conducted in partnership with external experts and were well received by the managers: ▲▲ Leadership Excellence Program (Leading Self): Managing Business & Developing People- The program focused on relevant managerial challenges such as creating ‘A Bias for Action’, Managing Stakeholder Expectations, Delegating and giving feedback. ▲▲ Young Leaders Excellence Program (YLEP): Leading Self - The program focused on relevant managerial learnings such as understanding values, motives, fears, understanding personality traits, emotional intelligence at work and influencing styles. 3. HCM Capability Building: With the objective of strengthening functional knowledge as well as managerial skills for the Bank’s HCM team, exclusive programs for HCM Relationship Managers & COE teams were rolled out during Q4. The programs were conducted in partnership with external experts and were well received by the team: ▲▲ Level-1 Accreditation Certification - Harrisons Assessments – The program provided an in-depth understanding of using assessment tools for employee hiring and developmental initiatives. The participants were certified in the assessment methodology after completing relevant post workshop project work. ▲▲ Stakeholder Management – The program focused on relevant HCM challenges such as Managing Stakeholder priorities, Conflict management, Influencing, Articulation, and Assertiveness. 4. Managing Self: 1-day classroom program focusing on professional effectiveness was done for Corporate & Support functions for General Management.

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Project Impact Workshop Project Impact was launched as a learning series for branch business leaders and relationship managers with a focus to enhance their business effectiveness enhancement encompassing Business & Service Excellence, Branch Administration, Banking Operations and Regulatory Practices & Consultative Selling Skills

Branch Banking Leaders Masterclass Workshop It is critical for Branch Banking to continue garnering CASA by fully utilizing the strength, scale, and reach of the Bank’s hub-spoke branch network. It is also equally important to explore and convert business from local communities in the branch service area while maintaining laser sharp focus on the branch banking sales strategy. Branch Banking Leaders (BBLs) play a critical role in maintaining the operational health and regulatory compliance at the Bank’s branches. The changing dynamics in the branch banking domain and the movement of staff to bigger roles require an effective process training framework for the staff at ground.

Core Objectives ▲▲ Operational Excellence ▲▲ Mitigation of Compliance Risk ▲▲ Robust Supervisory Review of Branch Functioning

Relationship Managers Consultative Selling Workshop The workshop was organized to equip Relationship Managers (RMs) with the concept of consultative selling, aimed at building long-term associations with prospective and existing customers. The facilitator will coach RMs on specific information, techniques, and strategies they need for identifying and qualifying prospects, increasing sales, and developing valued relationships with customers

Core Objectives ▲▲ Understanding the importance of behavior management through theatre methodology ▲▲ Building and managing relationships ▲▲ Understanding the five stages of HNI customer purchase-decision process ▲▲ Understanding the process of consultative selling

Annual Report 2018-19 47 Induction Program Corporate Induction continues to be YSB’s high-impact induction program that orients new employees on key areas that every YES BANKer must be aware of and internalize. The induction program is the first critical training for employees on key regulatory and compliance issues, including Know Your Customer (KYC) and Anti-Money Laundering (AML) guidelines, Information Security, products & processes, and HCM policies and procedures. During the reporting period, 241 induction programs were conducted for 4,657 executives and 7,832 executives were inducted through the e-learning modules.

Employee Training Programs Conducted

Particulars FY 2018-19 FY 2017-18 FY 2016-17 FY 2015-16

Total classroom - training programs conducted 5,410 5,035 3,640 2,737

Total executives trained in programs above 16,132 15,568 16,096 12,263

Total executives trained (e-learning) 20,306 16,108 19,758 N/A

Employees Trained by Gender (Classroom)

Particulars FY 2018-19 FY 2017-18 FY 2016-17 FY 2015-16

Male 13,117 12,811 13,025 9,934

Female 3,015 2,757 3,071 2,329

Total 16,132 15,568 16,096 12,263

Employees Trained by Management Category (Classroom)

Particulars FY 2018-19 FY 2017-18 FY 2016-17 FY 2015-16

Top Management 57 99 65 139

Senior Management 163 245 127 465

Middle Management 1,960 2,958 2,062 2,881

Junior Management 5,824 7,620 7,517 3,998

General Management 8,128 4,646 6,325 4,780

Total 16,132 15,568 16,096 12,263

Training Hours (Classroom and E-Learning)

Particulars FY 2018-19 FY 2017-18 FY 2016-17 FY 2015-16

Participant man-hours (classroom) 2,97,871 3,89,159 3,86,856 N/A

Participant man-hours (e-learning room) 4,11,303 3,39,446 5,81,545 N/A

Participant man-hours (classroom and e-learning) 7,09,174 7,28,605 9,68,401 5,67,628

Participant man-hours* per executive 33.55 39.95 48.12 37.84

* - includes man-hours of executives who resigned in reporting period

Average Training Hour (Classroom and E-Learning) – Gender

Particulars FY 2018-19 FY 2017-18 FY 2016-17 FY 2015-16

Male 33.05 39.35 46.91 N/A

Female 35.79 42.67 53.49 N/A

Total 33.55 39.95 48.12 N/A

48 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

Average Training Hour (Classroom and E-Learning) – Category

Particulars FY 2018-19 FY 2017-18 FY 2016-17 FY 2015-16

General Management 41.26 48.47 62.01 N/A

Junior Management 27.79 40.48 45.77 N/A

Middle Management 17.04 26.62 24.62 N/A

Senior Management 29.66 19.23 11.46 N/A

Top Management 22.78 10.13 10.90 N/A

Total 33.55 39.95 48.12 N/A

Training Target/ Plans for Next Year ▲▲ Role-Wise Certifications (mandatory) on Capacity Building, IT and Cyber Security for select BUs; in addition to BU specific certifications for select roles ▲▲ Focus on Business Priorities i.e. Compliance, Regulatory, Productivity, Cross Sell, Behavioral Skills and Service Culture ▲▲ Setting up of Talent Academy (in partnership with external institutes) to build a robust talent pool for all levels for meeting future talent requirements ▲▲ Leadership Development Framework for all Management Bands across all BUs focused on Leadership role transitions ▲▲ Professional Technology Programs in partnership with best-in-class external training partners to equip select YBL Executives on ‘Emerging Technologies’ in the banking eco system

Annual Report 2018-19 49 University & School Relationship The grand finale of the Transformation Series 2018 was Management (USRM) conducted in the month of November 2018. It witnessed top 15 student teams address themes on how to increase University and School Relationship Management (USRM) B2C exports from India, initiatives to promote India as is a structured, sustainable, and scalable engagement a leader in MSME exports, and how Indian MSMEs can program to create and maintain mindshare for YES BANK further leverage global opportunities. IIM Bangalore among students from top business schools of India, bagged the first place followed by Indian Institute of thereby positioning the Bank as a preferred employer. Foreign Trade (IIFT) and Shailesh J. Mehta School of Management, IIT Bombay in 2018. YES BANK Transformation Series YES Professional Entrepreneurship Program (Y-PEP)

The winners of YES BANK Transformation Series 2018 The Y-PEP program is YES BANK’s flagship campus YES BANK Transformation Series is a platform for recruitment program that endeavors to hire the most students from business schools and tech institutes to sought-after talent from the best business schools in step into the shoes of business leaders and provide India. The program positions YES BANK as an ‘Employer innovative solutions to live challenges faced by India Inc. of Choice’ across premium business school campuses The initiative is a part of YES BANK’s efforts to help make and helps develop a robust talent pool to drive the India’s youth future-ready by instilling entrepreneurship Bank’s future growth. During FY 2018-19, the Bank and innovation. hired 29 students for the Y-PEP program from 19 top campuses of the country. This highly qualified talent With collaboration and co-creation at its core, YES BANK pool has contributed to consistently augmenting and partnered with 12 global leaders for the 7th edition supporting the Bank’s knowledge based, state-of-the-art of Transformation Series to identify priority areas that technology-driven services across key banking need focus through scalable innovative solutions. relationships, products, knowledge advisory groups, Having addressed three key aspects of the economy – and critical support functions. Since its inception, the FinTech, Smart Cities, and Social Development last year, program has inducted over 1,000 top talent from premier the 7th edition of the competition explored focus areas business schools. brought together by global innovators like Adobe, Cisco, Microsoft, Shell, United Nations Development Program YES – Emerging Professionals and Indian pioneers like Big Basket, BookMyShow, Entrepreneurship Program (Y-EPEP) Sports Interactive, Urban Ladder and T-Hub. This year, During Q4 the Bank has on-boarded 51 Y-EPEPs for a the initiative received registrations from 16,000+ student two month long internship programs (April & May 2019). teams across the country. Offer letters for the Y-EPEPs were released during the quarter and a two day engaging induction was planned For the final round, YES BANK partnered with Invest India, for them. The induction was planned keeping the a non-profit venture under the Department of Industrial objectives of introducing the interns to YBL and help them Policy and Promotion (DIPP), Government of India, to experience our immersive culture. help promote cross-border e-commerce for India’s crucial MSME sector.

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YES Future Ready Scholarship Program application reads the resume line-for-line and determines information, including experience, YES Future Ready is a unique scholarship program that expertise and education background and then identifies 30 students from India’s premier B-schools and matches these with job description and derives a engineering institutes and awards them a scholarship of score representing, the extent of candidate match. `2 lakh for consistent academic excellence. ▲▲ Digital Signature: The ‘Digitally signed e-Offer Letter’ has led to approximately 98% of all offers getting digitally signed. This change has resulted in enhanced productivity, superior candidate experience, reduction in carbon footprint, cost saving and improved turnaround time. ▲▲ YES for YOU Employee Self-Service (ESS Portal): ESS Portal provides seamless access to key HCM functionalities like extracting/ viewing salary slips, tax forecast, investment declaration and The program offers a structured mentorship program for employee reimbursements. The key features of students to help them transition smoothly from student this portal encompass intuitive and user-friendly life to becoming well-rounded professionals, along with navigation. It offers mobility to access it anytime essential e-courses that help them significantly augment and anywhere, outside YES BANK domain from their skills. The students receive structured mentorship non-YBL device/ terminal. Additionally, the ESS by YES BANK’s top management across a span of Portal provides enhanced security feature of dual- four months to instill subject knowledge beyond their factor authentication by submitting One Time MBA/Engineering course curriculum. Password (OTP) sent on the employee’s registered mobile number. YES Future Ready 2019 saw more than 5,000 enthusiastic students register for the opportunity. Around 1/3rd of the ▲▲ Predictive Analytics: Successfully deployed Attrition total registrations were from technology schools. After a Model for various roles using Machine Learning rigorous selection process, 30 students were chosen as Algorithm (Random Forest) to predict employees the YES Future Ready scholars, who will participate in the that may exit the organization within a stipulated program from June 2019. time period. The model was developed on statistical tool using the performance, education, previous Digitalization Initiatives experience, leave/attendance data, compensation and other demographic details of the employee. ▲▲ YES for YOU Mobile: The HCM App for employees These predictive models will enable to develop an is aimed at providing employees with mobility, action plan in advance to curtail attrition. accessibility, convenience and a superior interface. ▲▲ Talocity: A video interface to evaluate candidates The App will act as a unified interface for performing using machine learning, social profile mapping, all transactions and accessing information. YES Bot, video analytics, and artificial intelligence engine. an intelligent AI-enabled ChatBot integrated with Candidates can give video interviews using Android- YES for YOU Mobile for instant employee query or iOS-based mobile devices or through web-based resolution. interface on Chrome or Mozilla browsers at their ▲▲ YES TALENT RADAR: This is an Artificial Intelligence convenience and the same can be reviewed by the (AI)-enabled talent screening and acquisition tool. Bank executives at ease, optimizing the time spent The platform uses Natural Language Processing on preliminary interviews. (NLP) and Deep Learning algorithms, which enhance efficiency, productivity, and quality of hiring. The

Annual Report 2018-19 51 HUMAN CAPITAL DATA POINTS Employee Strength FY 2018-19 Under 30 30-50 Above 50 Particulars* Total Male Female Male Female Male Female Top Management 0 0 47 2 20 1 70 Senior Management 0 0 169 21 8 1 199 Middle Management 7 1 2,080 253 20 1 2,362 Junior Management 1,120 318 5,312 821 3 1 7,575 General Management 4,906 1,773 3,582 668 1 0 10,930 Total 6,033 2,092 11,190 1,765 52 4 21,136 * There was a change in Management Band effective January 1, 2019

Employee Strength by Region Number FY 2018-19 North 6,597 East 1,119 West 9,620 South 3,800 Total 21,136

FY 2017-18 Under 30 30-50 Above 50 Particulars Total Male Female Male Female Male Female Top Management 0 0 76 10 18 2 106 Senior Management 0 0 238 20 3 0 261 Middle Management 58 18 2,795 386 9 3 3,269 Junior Management 2,321 810 5,054 861 2 0 9,048 General Management 3,162 988 1,207 196 1 0 5,554 Total 5541 1,816 9,370 1,473 33 5 18,238

FY 2016-17 Under 30 30-50 Above 50 Particulars Total Male Female Male Female Male Female Top Management 0 0 76 6 16 3 101 Senior Management 0 0 195 19 7 0 221 Middle Management 54 14 2,529 354 3 2 2,956 Junior Management 2,684 805 5,075 832 3 0 9,399 General Management 4,399 1,428 1,379 241 1 0 7,448 Total 7,137 2,247 9,254 1,452 30 5 20,125

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Total Attrition during the Year FY 2018-19 Under 30 30-50 Above 50 Attrition Particulars Male Female Male Female Male Female Rates Top Management 0 0 10 1 2 0 18.57% Senior Management 0 0 14 2 1 1 9.05% Middle Management 6 1 428 63 1 1 21.17% Junior Management 737 276 1,287 235 0 0 33.47% General Management 1,701 623 671 114 0 0 28.44% Total 2,444 900 2,410 415 4 2 29.22% Attrition Rates 40.51% 43.02% 21.54% 23.51% 7.69% 50.00%

Note: Attrition is based on Head Count as March 31, 2019 and includes only voluntary exits.

Total Exits During the Year by Region Number FY 2018-19 North 2,081 East 402 West 2,539 South 1,153 Total 6,175

FY 2017-18 Under 30 30-50 Above 50 Attrition Particulars Male Female Male Female Male Female Rates Top Management 0 0 14 0 2 1 16.04% Senior Management 0 0 25 2 3 0 11.49% Middle Management 12 4 441 66 0 0 16.00% Junior Management 1,031 331 1,593 277 1 0 35.73% General Management 1,951 709 509 98 0 0 58.82% Total 2,994 1,044 2,582 443 6 1 38.77% Attrition Rates 54.03% 57.49% 27.56% 30.07% 18.18% 20.00%

FY 2016-17 Under 30 30-50 Above 50 Attrition Particulars Male Female Male Female Male Female Rates Top Management 0 0 2 0 0 0 1.98% Senior Management 0 0 14 1 0 0 6.79% Middle Management 10 2 261 46 1 0 10.83% Junior Management 660 225 1,103 165 0 0 22.91% General Management 1,847 677 480 66 1 0 41.23% Total 2,517 904 1,860 278 2 0 27.63% Attrition Rates 35.27% 40.23% 20.10% 19.15% 6.67% 0.00%

Annual Report 2018-19 53 Total Hires during the Year FY 2018-19 Under 30 30-50 Above 50 Hire Particulars Male Female Male Female Male Female Rates Top Management 0 0 2 0 2 0 5.71% Senior Management 0 0 11 4 2 1 9.05% Middle Management 6 1 350 37 2 0 16.77% Junior Management 813 203 1,747 236 0 0 39.59% General Management 3,452 1,261 1,035 181 0 0 54.25% Total 4,271 1,465 3,145 458 6 1 44.22% Hire Rates 70.79% 70.03% 28.11% 25.95% 11.54% 25.00%

Total Hires During the Year by Region Number FY 2018-19 North 2,774 East 526 West 4,186 South 1,860 Total 9,346

FY 2017-18 Under 30 30-50 Above 50 Hire Particulars Male Female Male Female Male Female Rates Top Management 0 0 5 0 1 0 5.66% Senior Management 0 0 14 2 0 0 6.13% Middle Management 28 4 450 56 1 1 16.52% Junior Management 1,301 466 1,025 157 0 0 32.59% General Management 1,480 439 160 33 0 0 38.03% Total 2,809 909 1,654 248 2 1 30.83% Hire Rates 50.69% 50.06% 17.65% 16.84% 6.06% 20.00%

FY 2016-17 Under 30 30-50 Above 50 Hire Particulars Male Female Male Female Male Female Rates Top Management 0 0 6 1 0 0 6.93% Senior Management 0 0 26 0 1 0 12.22% Middle Management 35 4 752 109 1 0 30.48% Junior Management 2,133 563 2,099 283 0 0 54.03% General Management 3,558 1,141 475 68 2 0 70.41% Total 5,726 1,708 3,358 461 4 0 55.94% Hire Rates 80.23% 76.01% 36.29% 31.75% 13.33% 0.00%

Note: Employee Profile analysis is based on the database maintained by the Bank’s HCM units, which may differ from the Bank’s total headcount on a particular date. HCM data does not included employee of YES FOUNDATION and Yes Securities (India) Limited. No significant variations were observed in the employment related data reported above.

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Return to Work after Parental Leaves FY 2018-19 FY 2017-18 FY 2016-17 Particulars Maternal Paternal** Maternal Paternal** Maternal Paternal** Employees taking Parental leave 204 1118 172 1088 148 1005 Employees resuming work 198 1118 168 1088 144 1005 Employees retained after resuming 188 1118 162 1088 142 1005 work in the reporting period Return to Work Rate 92.2% 100% 94.2% 100% 95.9% 100% Employees retained 12 months after NA* NA* 110 776 94 743 resuming work Retention Rate (after 12 months)^ N/A* N/A* 64.0% 71.3% 63.5% 73.9%

* To be reported in FY 2019-20 reporting cycle. ** No causal relationship has been determined between Paternal leave and voluntary exits. ^ The percentage of employees retained 12 months after returning to work following a period of parental leave.

Annual Report 2018-19 55 MANUFACTURED CAPITAL Manufactured capital is the Bank’s tangible and intangible infrastructure, including IT assets, used for value creation through business activities. 1,120 1,456 IMPLEMENTING Branches ATMs Supplier Code of Conduct

YES BANK is a public limited company listed on the ▲▲ Increased compliance and the National Stock ▲▲ Risk management Exchange of India. During the reporting period, there has been no significant change in the Bank’s shareholding ▲▲ Strengthening systems, controls, and processes pattern, the details of which are available in this report on ▲▲ Imbibing sustainable sourcing pages 178-180. The Bank has a diverse supplier base, including suppliers Through its pan-India network of branches, ATMs, regional of the key platforms on which the Bank operates. As the offices and customer touchpoints, supported by a robust Bank is spread across the country, it also procures from ‘digical’ infrastructure, YES BANK offers a comprehensive local vendors for localized consumption of products and range of banking products and services to its entire services. The Bank has formed strategic relationships spectrum of customers. Manufactured capital thus, with eminent Indian and global companies, which not becomes a critical enabler for the Bank. More information only widen business platforms but also lay the foundation on the Bank’s bouquet of products and services is for a sustainable future. A comprehensive list of available at its website, www.yesbank.in. YES BANK’s strategic relationships can be accessed at https://www.yesbank.in/about-us/corporate-partnership. Geographic Footprint The Bank follows the mechanism of segregating its YES BANK is headquartered in Mumbai. It provides vendors into four categories: Strategic, Critical, Core and seamless banking experience across 1,120 branches and Basic. Based on this categorization, the Bank implements 1,456 ATMs in 29 states and seven Union Territories of its vendor review and risk management practices. India as on March 31, 2019. The Bank’s state-of-the-art YES BANK has put in place processes to ensure Vendor branch infrastructure and cutting-edge technology enable redundancy/ Business Continuity Planning (BCP) for it to operate with a customer-centric approach. The Bank critical spends. continues to have centralized back office functions for various business lines served from National Operating YES BANK has well-established vendor guidelines Centers (NOC) in Mumbai, Gurgaon and Chennai, including outlining its vendor selection criteria and compliance the ‘Yes Touch Contact Centre’ located in NOC Gurgaon. with laws of the land in addition to assessing a vendors’ The YES Touch Contact Centre is an extension of branches credibility, capability and cost to deliver. As part of the to serve customers, with a focus to engage and involve Bank’s stated objective and commitment to implement customers by delivering tele-banking services on phone. best practices in Corporate Governance, the Bank has The Bank has one international representative office in a web-based ‘Corporate Whistleblower Initiative’ (CWI) Abu Dhabi, UAE. which is an independent online reporting service aimed at facilitating secure and confidential communication YES BANK’s Supply Chain between the Bank and its vendors. The Bank’s procurement practices continue to be During FY 2018-19, the Bank continued with its centrally driven by the Central Procurement Unit (CPU) efforts of increasing its Spend Penetration (Spends and overseen by its Central Procurement Committee. Influenced/Addressable Spends) and several cost The Bank is focused on its roadmap to mature its management initiatives were identified based on spend vendor management framework in line with the global analytics to optimize cost structures. To meet the goal, best practices while ensuring proactive management the procurement team in collaboration with various of strategic supplier partners and adequate risk operations/ functional units looks for opportunities for management. The CPU continues to strengthen its supply value engineering and innovative solutions. To maximize chain based on the following principles: sustainable sourcing practices, various initiatives have

56 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

been identified to reduce power consumption and use of paper products, details of which are available on pages 38-39 of the Annual Report.

In line with YES BANK’s vision of digitalization of processes and further strengthening sourcing, contract management and vendor performance management, the Bank implemented the following processes in FY 2018-19:

▲▲ SAP Ariba e-Sourcing platform ▲▲ Contract Management module ▲▲ Supplier Lifecycle Process module ▲▲ Centralization of procurement operations

The e-sourcing platform is helping the Bank bring in fair and transparent sourcing processes. The Bank intends to increase the usage of this platform in a phased manner YES BANK’s Supplier Code of Conduct integrates and institutionalize the process. sustainability priorities in its supplier base

A breakdown of the Bank’s expenses under various Workplace Technology Mobility operational heads, including services provided by its supply chain is available on page 204 of this report. YES BANK has invested and implemented state-of-the-art technology initiatives since its inception. The Bank’s Supply Chain Sustainability philosophy is to partner companies with highly competitive products and established businesses, and develop As the first Indian banking signatory to the UN Global specific solutions that become differentiators in Compact, YES BANK continues to abide by the 10 the marketplace. Principles of the Compact covering: human rights, labor, environment, and anti-corruption. The Bank uses these Optimizing IT asset use in service organizations is principles as a foundation for building its sustainable emerging as a global best practice aimed at lowering supply chain practices. operational costs and reducing e-waste.

The Bank believes that its suppliers are an integral YES BANK has implemented Microsoft Kaizala to ensure part of its ecosystem and constantly strives to optimize smooth and consistent connectivity between its corporate its strengths with the competencies of its supply headquarters, branch office employees and field staff. chain partners. The tool powers the Bank’s sales and distribution workforce across the country, enabling the transmission In FY 2017-18, YES BANK adopted a Supplier Code of of relevant information such as sales reports or service Conduct, based on Environmental, Social and Governance requests through a mobile app, without the need to be (ESG) parameters, defining the Bank’s commitment to connected to the Branch or Corporate IT network. human rights, fair labor practices, environmental progress, and anti-corruption policies. The Bank is in the final stages of automating the data entry process for recording sales, leads, and service requests for Through this initiative, the Bank continues to encourage its Inclusive and Social Banking. Through barcode scanning suppliers to support its sustainability agenda, and expects and data capture technology, the new system would help its supply chain partners to comply with the applicable reduce the time spent by the sales team on-field, improve laws of the land and adhere to internationally recognized productivity and efficiency, minimize manual errors and ESG standards. The Bank has also promoted the use of enable real-time updates to senior management. an ESG self-assessment tool, among its suppliers to help them understand their current practices and identify areas for improvement.

Annual Report 2018-19 57 Annual Business Responsibility Report (ABRR)

SECTION A: GENERAL INFORMATION ABOUT THE COMPANY

1. Corporate Identity Number (CIN) of the Company L65190MH2003PLC143249 2. Name of the Company YES BANK Limited YES BANK Tower, IFC – 2, 15th Floor, Senapati Bapat Marg, 3. Registered address Prabhadevi (West), Mumbai, 400 013, Maharashtra, India 4. Website www.yesbank.in 5. E-mail ID [email protected] 6. Financial Year reported FY 2018-19 7. Sector(s) that the Company is engaged in (industrial As per India’s National Industrial Classification 2008 activity code-wise) (NIC‑2008): Section K – Financial and Insurance Activities Division 64 – Financial service activities, except insurance and pension funding 8. List three key products/services that the Company a) Retail Banking manufactures/provides (as in balance sheet): b) Corporate Banking c) Treasury 9. Total number of locations where business activity is undertaken by the Company a) Number of International Locations (Provide Two – The Bank has representative office in Abu Dhabi*. details of major 5) The Bank also operates an IFSC Banking Unit (IBU) in Gujarat International Finance Tec‑City (GIFT) b) Number of National Locations The Bank has 1,120 branches, two National Operating Centers in Mumbai and New Delhi, one National Centralized Operations Management and Services Delivery facility in Chennai and 1,456 ATMs, as on March 31, 2019. 10. Markets served by the Company – Local/ State/ YES BANK is a pan-India Bank, with branches and ATMs National/ International in all states and Union Territories of India. YES BANK operates one Representative Office in Abu Dhabi (UAE) to enhance its engagement with businesses and Indians in GCC region.

*YES BANK has also received approval from the Reserve Bank of India to open two representative offices in London and Singapore, respectively.

SECTION B: FINANCIAL DETAILS OF THE COMPANY 1. Paid up Capital (`) 463.01 crore 2. Total Turnover (`) 34,214.9 crore 3. Total profit after taxes (`) 1,720 crore Total Spending on Corporate Social Responsibility 4. 1.13% (CSR) as percentage of profit after tax (%) 5. List of activities in which expenditure in 4 above has i. YES COMMUNITY been incurred:- ii. Livelihood & Water Security iii. Say YES to Sustainable MSMEs in India iv. YES STEADY – Skills training and enhancement for development of youth v. Support to YES FOUNDATION vi. Natural Capital Initiatives

58 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

SECTION C: OTHER DETAILS 1. Does the Company have any Subsidiary Company/ YES (three subsidiaries) Companies? 2. Do the Subsidiary Company/Companies participate in Some BR activities of YES BANK’s three subsidiary the BR Initiatives of the parent company? If yes, then companies are conducted as part of the parent company. indicate the number of such subsidiary company(s): 3. Do any other entity/entities (e.g. suppliers, No distributors etc.) that the Company does business with, participate in the BR initiatives of the Company? If yes, then indicate the percentage of such entity/ entities? [Less than 30%, 30-60%, More than 60%]

SECTION D: BR INFORMATION 1. Details of Director/Directors responsible for BR a) Details of the Director/Director responsible for implementation of the BR policy/policies 1. DIN Number: 00091746 2. Name: Mr. Ravneet Gill 3. Designation: Managing Director & CEO

b) Details of the BR head Sr. No. Particulars Details 1. DIN Number (if applicable) N/A 2. Name Ms. Namita Vikas 3. Designation Group President & Global Head, Climate Strategy & Responsible Banking 4. Telephone number +91 22 3347 9852 5. E-mail ID [email protected]

2. Principle-wise (as per NVGs) BR Policy/policies (Reply in Y/N) Sr. Questions P1 P2 P3 P4 P5 P6 P7 P8 P9 No. 1. Do you have a policy/policies for.... Y Y Y Y5 Y Y Y Y9 Y1 2. Has the policy being formulated in consultation with the Y Y Y Y Y Y Y Y Y relevant stakeholders? 3. Does the policy conform to any national/international Y* Y* Y* Y* Y* Y* Y* Y* Y* standards? If yes, specify? (50 words) 4. Has the policy being approved by the Board? Y Y Y Y Y Y Y Y Y If yes, has it been signed by MD/ owner/ CEO/ appropriate Board Director? 5. Does the Company have a specified committee of the Board/ Y Y Y Y Y Y Y Y Y Director/ Official to oversee the implementation of the policy? 6. Indicate the link for the policy to be viewed online? Y1 Y3 N4 Y5 Y6 Y7 Y8 Y5 Y1 7. Has the policy been formally communicated to all relevant Y1 Y3 Y4 Y Y2 Y Y Y Y internal and external stakeholders? 8. Does the Company have in-house structure to implement the Y Y Y Y Y Y Y Y Y policy/policies. 9. Does the Company have a grievance redressal mechanism Y1 Y Y Y Y Y Y Y Y related to the policy/policies to address stakeholders’ grievances related to the policy/policies? 10. Has the Company carried out independent audit/evaluation of Y2 Y2 Y Y Y2 Y2 Y2 Y Y2 the working of this policy by an internal or external agency? * All policies of the Bank have been developed as a result of detailed consultations and research on the best practices adopted by banks and organizations across the national and international industry norms, and per the requirements of the Bank.

Annual Report 2018-19 59 1. The Code of Ethics for employees and certain policies, including the Citizen’s Charter, Charter of Customer Rights, Grievance Redressal and Banking Practice Code are available on the website at https://www.yesbank.in/regulatory_policies.

2. Yes, for certain policies and procedures.

3. The Bank has in place the Environment & Social Policy, which integrates environmental and social risks into its overall credit risk assessment framework. The Summary of the Policy is available at https://www.yesbank.in/beyond-banking/ responsible-banking/responsible-banking/facilitating-responsible-investments/environmental-and-social. The Bank has the Environmental Management Policy which focuses on achieving greater environmental sustainability within the Bank’s operations. The Policy is accessible at https://www.yesbank.in/regulatory_policies.

4. Employee focused policies are accessible only by employees and are not shared in the public domain. The bank’s Human Capital Management practices and activities can be accessed at https://www.yesbank.in/work-with-us.

5. YES BANK views the unbanked and under-banked population in rural and urban India as a primary stakeholder for financial inclusion. Through its products and services focused at the Base of the Pyramid, the Bank aims to positively impact this marginalized and disadvantaged stakeholder group. The Bank has policies in place, and adheres to regulatory guidelines, to drive its business practices. The Bank as a Code of Commitment to the MSME Sector, accessible at https://www.yesbank.in/regulatory_policies.

6. The Bank has several policies and guidelines in place for ensuring all stakeholder rights and the regulatory laws are adhered to in its operations. Through its policies on environmental and social risk assessment, the Bank ensures compliance of all pertinent regulations in its lending portfolio as well. Similarly, the Bank ensures that all regulations are adhered to in its CSR activities.

7. The Bank’s Environmental Management Policy is available on the Bank’s website at https://www.yesbank.in/pdf/emp. The Bank’s CSR Policy is accessible at https://www.yesbank.in/pdf/ybl_corporate_social_responsibility_policy.

The Bank’s complete response to its environmental priorities and commitments, through business activities, CSR, and other activities, is available in its Sustainability Report, accessible at https://www.yesbank.in/about-us/investor-relations/ yes-bank-sustainability-report.

8. The Bank aims to take a leadership position in influencing public policy and discourse by hosting and participating in thought platforms and through knowledge research. Details on the Bank’s knowledge banking initiatives can be accessed at https://www.yesbank.in/beyond-bankingold. For additional details, please refer to the responses to Principle 7 in this BRR.

9. In addition to the Bank’s business activities focusing on inclusive growth, and equitable and sustainable development, highlighted in Point 5 above, the bank creates a positive impact through its CSR activities. The activities and impact are included in the Sustainability Disclosures that is a part of this Annual Report.

2a. If answer to Sr. No. 1 against any principle, is ‘No’, please explain why: (Tick up to 2 options) – Not applicable Sr. Questions P1 P2 P3 P4 P5 P6 P7 P8 P9 No. 1. The Company has not understood the Principles 2. The Company is not at a stage where it finds itself in a position to formulate and implement the policies on specified principles 3. The Company does not have financial or manpower resources available for the task 4. It is planned to be done within next 6 months 5. It is planned to be done within the next 1 year 6. Any other reason (please specify)

60 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

3. Governance related to BR the Ten Principles of the UN Global Compact for its strategic suppliers. ▲ Indicate the frequency with which the Board of Directors, Committee of the Board 2. How many stakeholder complaints have or CEO to assess the BR performance of the been received in the past financial year Company. Within 3 months, 3-6 months, and what percentage was satisfactorily Annually, More than 1 year. resolved by the management? If so, provide The Bank has a CSR Committee of the Board, which details thereof, in about 50 words or so. meets at least twice in a year. The Managing Director Please refer to page number 254 for Customer & CEO is a member of the CSR Committee, The Complaints, page number 172 for Shareholder Group President & Global Head, Climate Strategy & Complaints in this Annual Report. Responsible Banking, attends all meetings. For Employee complaints, please refer to The Bank has an internal system in place for pages 43-44 of the Sustainability Disclosures in this reviewing the BR performance, headed by the Annual Report. Managing Director & CEO with the Group President & Global Head, Climate Strategy & Responsible Banking. The Group President & Global Head, Principle 2 Climate Strategy & Responsible Banking is also a 1. List up to three of your products or services part of a four member internal CSR Management whose design has incorporated social Committee which is represented at meetings of the or environmental concerns, risks and/or Board of Directors. opportunities. ▲ Does the Company publish a BR or a i. Digital Banking – YES MONEY, YES PAY, AEPS, Sustainability Report? What is the hyperlink Green Future: Deposit for viewing this report? How frequently it is published? ii. Inclusive and Social Banking – YES LEAP/ YES SAHAJ/ YES Samadhaan/ YES Joint Yes. YES BANK reports on its sustainability performance Liability Group/ Affordable Housing in its annual Sustainability Report. The report is available online at https://www.yesbank.in/about-us/investor- iii. Sustainable Investment Banking and Corporate relations/yes-bank-sustainability-report. Finance – Lending and advisory in clean energy, technology and water, among others The Bank publishes its Sustainability Disclosures as part of its Annual Report which is based on the 2. For each such product, provide the GRI framework. The Disclosures for FY 2018-19 are following details in respect of resource use included in this Annual Report and can be accessed (energy, water, raw material etc.) per unit at https://www.yesbank.in/about-us/investors- of product (optional): relation/financial-information/annual-reports. i. Reduction during sourcing/ production/ SECTION E: PRINCIPLE-WISE distribution achieved since the previous PERFORMANCE year throughout the value chain? Principle 1 On account of the nature of its services, the major resources consumed at the Bank are 1. Does the policy relating to ethics, bribery grid electricity and paper. During the reporting and corruption cover only the Company? period, the Bank has launched several key initiatives and achieved significant traction on Yes on-going initiatives, towards achieving internal resource efficiencies, focused on product Does it extend to the Group/ Joint Ventures/ and process digitization, greater employee Suppliers/ Contractors/ NGOs/ Others? awareness, reduction in waste generation, and The Bank has a separate Vendor Management improved waste management. Policy that covers the pertinent issues related to ethics, bribery and corruption. The Bank also has In the reporting year, YES BANK continues to in place a Supplier Code of Conduct in line with be 14001:2015 Environment Management System certified, which now covers 744

Annual Report 2018-19 61 bank branches and 4 office locations, and Unit, the Bank strives to achieve greater follows the Environmental Management Policy, transparency, compliance and adoption of wherein the Bank has taken a target to reduce environmental and labor best practices. its Carbon emissions intensity target by 10% year-on-year. 4. Has the Company taken any steps to procure goods and services from local & The key initiatives focusing on achieving small producers, including communities resource consumption efficiency at the Bank, surrounding their place of work? and the impact achieved, are included in the If yes, what steps have been taken to improve Sustainability Disclosures 2018-19 that is a their capacity and capability of local and small part of this Annual Report. vendors? ii. Reduction during usage by consumers Yes. The Bank’s award-winning product for the (energy, water) has been achieved since Bottom of the Pyramid – YES MONEY, is based on the previous year? the Business Correspondent (BC) model that enrols local small business owners as BC Agents (BCA) to Given that the Bank’s primary product offerings provide remittance services to local communities. are financial services, resource consumption These BCAs are trained in remittance operations during usage by consumers is not a significant and basic banking. material issue for the banking sector in general. During the year, the Bank’s 744 branch In addition to the Bank’s procurement done through locations and 4 offices were certified for the Central Procurement Unit, given that the Bank ISO 14001:2015 Environment Management has branches in all states and Union Territories in System, under which the Bank makes maximum India, it also procures locally for daily use items and effort to raise awareness among its customers services such as stationary, food and beverages on efficient resource consumption, and on and local transport. It works with most local broader national agendas, such as Green vendors to align them with the Bank’s procurement Good Deeds, through YES COMMUNITY and requirements and standards. related initiatives. 5. Does the Company have a mechanism to The Bank is rapidly adopting technology to recycle products and waste? If yes, what is digitize its operations and product offerings, the percentage of recycling of products and and has witnessed a strong growth in adoption waste (separately as <5%, 5-10%, >10%). of mobile banking, mobile wallets and internet banking, thus reducing the incidence of paper Also, provide details thereof, in about 50 words usage and travel among its customers. or so. Yes. As the Banking sector’s primary product offering The impact achieved through related initiatives is financial services, its waste is related to paper, is included in the Sustainability Disclosures, as municipal waste, and electronic waste. The Bank has a part of this Annual Report. strong policies and practices in place for responsible disposal of all such waste through authorized third 3. Does the Company have procedures in party vendors. For waste paper disposal, the Bank place for sustainable sourcing (including has local authorized vendors to ensure near 100% transportation)? recycling of waste paper, and has partnered with i. If yes, what percentage of your inputs was a vendor which provides stationary from recycled sourced sustainably? Also, provide details paper, in return for the paper disposal. For e-waste thereof, in about 50 words or so. handling, the bank has a national authorized vendor for centralized collection and handling of e-waste to Given that the Banking sector’s primary ensure near 100% of e-waste management. product offering is financial services, the Bank does not have any raw material requirements. The Bank’s waste management practices are The primary resources consumed for its included in the Sustainability Disclosures, which is a day-to-day operations are paper, grid electricity, part of this Annual Report. water from municipal sources, and diesel, for DG sets in locations with erratic availability of electricity. Through a centralized procurement process, led by the Central Procurement

62 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

Principle 3 3. Please indicate the Number of permanent women employees. 1. Please indicate the Total number of employees. The Bank had 3,861 permanent women employees on March 31, 2019. YES BANK had 21,136 employees as on March 31, 2019. 4. Please indicate the Number of permanent employees with disabilities 2. Please indicate the Total number of employees hired on temporary/ The Bank, being an Equal Opportunity Employer, contractual/ casual basis. makes no distinction between employees on the basis of disabilities. Fixed Term Contract Financial Year ending Employees (Trainee/ Advisor, etc.) 5. Do you have an employee association that is recognized by management? Head Count as on 63 March 31, 2017 The Bank does not have an employee association. Head Count as on 67 March 31, 2018 6. What percentage of your permanent employees is members of this recognized Head Count as on 39 employee association? March 31, 2019 Not applicable as the Bank does not have an employee association.

7. Please indicate the Number of complaints relating to child labor, forced labor, involuntary labor, sexual harassment in the last financial year and pending, as on the end of the financial year. Sr. No. of complaints filed during No.of complaints pending as Category No. the financial year on end of the financial year 1. Child labor/ forced labor/ involuntary labor Nil Nil 2. Sexual harassment 10 2 3. Discriminatory employment Nil Nil

8. What percentage of your undermentioned which is over 78.09% of the Bank’s total employees were given safety & skill up- women employees. gradation training in the last year? iii. Casual/ Temporary/ Contractual Employees i. Permanent Employees The Bank provides training on the Bank’s The Bank has a separate entity, the policies and process to advisors, trainees, etc. YES SCHOOL OF BANKING, as a center of as and when required. excellence in imparting learning solutions in banking, skill development and personality iv. Employees with Disabilities development, among others. The Bank’s training programs are divided into 5 broad All employees are imparted training basis categories: Behavioral and Leadership Skills, their training requirements and organizational Employee Induction, Mandatory Policies profile. and Compliance, Process Training and Product Training. In the reporting period, Principle 4 16,132 employees were trained under 5,410 classroom-based training programs. 1. Has the Company mapped its internal and external stakeholders? ii. Permanent Women Employees Yes 3,015 women employees were imparted classroom-based training during the year,

Annual Report 2018-19 63 2. Out of the above, has the Company 2. How many stakeholder complaints have identified the disadvantaged, vulnerable & been received in the past financial year and marginalized stakeholders? what percent was satisfactorily resolved by the management? The under-banked and unbanked population in rural and urban India, which is still not entirely integrated The Bank did not receive any complaint related to into India’s mainstream economy, can be vulnerable human rights violations from internal or external to socio-economic exploitation. The bank focuses stakeholders. Complaints related sexual harassment on financial inclusion as a key business priority to are covered separately under Principle 3. positively impact this stakeholder group. Principle 6 3. Are there any special initiatives taken by the Company to engage with 1. Does the policy related to Principle 6 cover the disadvantaged, vulnerable and only the Company or extends to the Group/ marginalized stakeholders? If so, provide Joint Ventures/ Suppliers/ Contractors/ details thereof, in about 50 words or so. NGOs/ Others? Yes. The Bank engages with such stakeholders The Bank has multiple policies that directly and in multiple ways. Through its focused Business indirectly communicate its support and adherence Units such as Inclusive and Social Banking, Digital of Principle 6. Banking, Agribusiness Product Banking and Rural Retail Banking, the Bank offers financial products The Environment & Social Policy (ESP) is based on and services to diverse stakeholders in rural and international best practices such as the Equator urban India. Details on the Bank’s business units Principles and the IFC Guidelines. Under the Policy, can be accessed in the Management Discussion & the Bank ensures environment and social risk is Analysis in this Annual Report. integrated with the overall credit risk appraisal process. The Policy also includes an exclusion list The Bank has high-impact CSR initiatives underway to flag socially and/or environmentally irresponsible on key areas of socio-economic development and proposals, and guides the Bank in engaging with community impact. These include YES COMMUNITY, clients towards adopting best practices. its innovative branch-based community engagement initiative, and other initiatives focusing on skill The Environmental Management Policy guides development in rural India, environmental efficiency the Bank towards, achieving internal resource in the MSME sector, and livelihood and water efficiency, creating employee awareness and security, among others. Details are available in the communicating positive environmental action Sustainability Disclosures section in this Annual among its stakeholders. Report. The CSR Policy of the Bank includes Environment Principle 5 Sustainability as one of its focus areas. The Bank has undertaken several CSR initiatives with positive 1. Does the policy of the Company on human direct environmental impact or towards creating rights cover only the Company or extend awareness among stakeholders. to the Group/ Joint Ventures/ Suppliers/ Contractors/ NGOs/ Others? The Bank also has in place a Supplier Code of Conduct that promotes ESG best practices among The Bank has in place policies and processes that its supplier base. cover various aspects of Human Rights, specific to employees, and external stakeholders such 2. Does the Company have strategies/ as its CSR partners, supply chain and corporate initiatives to address global environmental customers. In addition, the Bank’s corporate whistle- issues such as climate change, global blower program covers all its internal and external warming, etc.? stakeholders. Yes.

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If yes, please give hyperlink for webpage Management Committee overseeing its E&S risk etc. preparedness across its business operations and community activities. YES BANK is a signatory to international protocols and initiatives, such as the UNEP Finance Initiative, 4. Does the Company have any project UN Global Compact, CDP (formerly Carbon related to Clean Development Mechanism? Disclosure Project), the Natural Capital Finance If so, provide details thereof, in about 50 Alliance, where it works on creating awareness and words or so. Also, if Yes, whether any impact at a global level, on issues of environmental environmental compliance report is filed? and social significance. YES BANK has a significant portfolio in clean YES BANK is among the leaders in the Indian banking energy, water and waste management, and has sector in driving climate finance. In 2015, the Bank taken a public commitment to mobilize funding of had taken a commitment to target mobilizing USD 5 USD 5 billion towards climate action by 2020. In the billion up to 2020 for climate action, and reports its reporting period, the bank committed to mobilize Renewable energy funding portfolio annually. In the USD 1 billion to solar project till 2023, and mobilize reporting period, the bank committed to mobilize USD 5 billion till 2030. The Bank’s portfolio is USD 1 billion to solar project till 2023, and mobilize highlighted in the Sustainability Disclosures in this USD 5 billion till 2030. Annual Report. Projects that the Bank has funded or advised may be linked to Clean Development In addition, through the Environment & Social Mechanism. Policy, the Bank incorporates Environmental and social risk assessment into its overall credit risk 5. Has the Company undertaken any other assessment process. initiatives on – clean technology, energy efficiency, renewable energy, etc. The Bank is the first bank globally to migrate to Yes. the ISO 14001:2015 certification for Environment Management System, and has 744 branches and 4 If yes, please give hyperlink for web page corporate locations. etc. The details can be accessed in YES BANK has one of the largest active debt and the Bank’s Sustainability Report at advisory portfolios in the Indian banking space, in https://www.yesbank.in/about-us/investor-relations/ renewable energy, water, waste management, and yes-bank-sustainability-report. other climate-linked sectors. In December 2015, on the occasion of COP21 at Paris, the Bank took 3. Does the Company identify and assess a public commitment to mobilize funding of USD 5 potential environmental risks? billion for climate action up to 2020. In the reporting period, the bank committed to mobilize USD 1 Yes. billion to solar project till 2023, and mobilize USD 5 billion till 2030. The Bank assesses its environmental risk in multiple ways. The Bank’s Environment and Social Policy, The Bank’s clean technology portfolio in debt and which is based on international best practices advisory is included in the Sustainability Disclosures such as the Equator Principles and IFC Guidelines, section of this Annual Report. integrates Environmental and Social risks into its overall credit risk assessment mechanism. Internally, under its ISO 14001:2015 certification for Environment Management System, the Bank has YES BANK is the first bank globally to migrate to launched several initiatives to rationalize resource the ISO 14001:2015 certification for Environment consumption and reduce waste consumption. Management System, with its 744 branches and 4 office locations certified. Guided by the certification As part of its CSR commitments, the Bank is driving and its Environmental Management Policy, the Bank several initiatives that focus on energy efficiency in assesses the environment risks of its operations. the MSME sector, provide clean and safe drinking water for rural communities, and support protection As part of its overall risk management of endangered species. framework, the Bank has a Reputational Risk

Annual Report 2018-19 65 The Bank’s initiatives and actions are included national and global policy and industry action on in the Sustainability Disclosures included in this pertinent causes such as climate action, digital Annual Report. economy, and economic reforms. The Bank is a member of protocols and alliances in India and 6. Are the Emissions/Waste generated by abroad that bring like-minded stakeholders together the Company within the permissible limits on specific issues. given by CPCB / SPCB for the financial year being reported? Principle 8 Yes. The Bank’s primary wastes – paper and 1. Does the Company have specified electronic waste, are recycled to the maximum extent programs/ initiatives/ projects in pursuit possible through third party vendors. The Bank’s of the policy related to Principle 8? If yes emissions and waste are within permissible limits of details thereof. the laws applicable. At the branches where the Bank uses Diesel generator sets due to erratic electricity Yes. The Bank has focused Business Units whose supply, it ensures it only uses low noise and low products and services promote inclusive growth and emission sets with proper procedures in place to equitable development in India. The Inclusive and handle the used oil. Social Banking unit has a range of financial products and services targeting the Bottom of the Pyramid in 7. Number of show cause/legal notices rural and urban India. received from CPCB / SPCB which are pending (i.e. not resolved to satisfaction) Through the Digital Banking unit, the Bank is driving as on end of Financial Year. digital payments across all economic sections of the economy and is driving the use of rising The Bank has not received any notice during the mobile and internet connectivity among Indians for reporting year. banking activities.

Principle 7 Through its CSR mandate, the Bank is driving key initiatives in livelihood and water security, skill 1. Is your Company a member of any trade development, and environmental sustainability, and chamber or association? If Yes, Name among others. only those major ones that your business deals with: The details of the Bank’s key programs and initiatives a) CII are included in the Sustainability Disclosures as a part of this Annual Report. b) FICCI c) ASSOCHAM 2. Are the programs/ projects undertaken through in-house team/ own foundation/ d) Indian Banks Association external NGO/ government structures/ any e) USIBC other organization? f) UKIBC The Bank’s products and services catering to the Bottom of the Pyramid and digital banking services 2. Have you advocated/lobbied through are driven directly by the Banking Units, which may above associations for the advancement partner with Business Correspondents, technology or improvement of public good? providers, and others, to drive the projects on-ground. Yes. The Bank’s CSR projects are driven primarily If yes specify the broad areas ( drop box: Governance by the Responsible Banking unit in conjunction and Administration, Economic Reforms, Inclusive with pertinent Business Units. In addition, Development Policies, Energy security, Water, Food YES FOUNDATION, the Bank’s social development Security, Sustainable Business Principles, Others) arm, is a separate charitable Trust driving several initiatives of its own across India. The Bank partners The Bank, through broad level actions and with NGOs for several of its CSR projects to drive initiatives, actively works towards influencing implementation on the ground.

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3. Have you done any impact assessment of laws? Yes/ No/ N.A./ Remarks (additional your initiative? information) Yes. The socio-economic and environmental impact The Bank follows the highest standards of product of the Bank’s products and services catering to the and service responsibility, in complete compliance Bottom of the Pyramid and its CSR initiatives are with all the regulations set by the Reserve Bank of included in the Sustainability Disclosures section of India. The Bank is a member of the Banking Codes this Annual Report. and Standards Board of India (BCSBI), which is an independent watchdog for service quality of the 4. What is your Company’s direct contribution Banking sector. to community development projects – Amount in INR and the details of the Under the aegis of the YES SCHOOL OF BANKING, projects undertaken. all employees are trained on pertinent regulations and requirements, and employees in client-facing In FY 2018-19, YES BANK spent `53.78 crore roles are provided enhanced training on product on CSR, in accordance with Schedule VII of the suitability and appropriateness. As per regulatory Companies Act, 2013. guidelines, all notices, regulations and policies are mandatorily displayed at the Bank’s branches. A brief outline of the Bank’s direct contribution to community development is included in Annexure A comprehensive list of Regulatory Policies 1 – The Annual Report on Corporate Social can be accessed on the Bank’s website at Responsibility (CSR) Activities, on pages 121-123 of https://www.yesbank.in/regulatory_policies. this Annual Report. 3. Is there any case filed by any stakeholder 5. Have you taken steps to ensure that this against the Company regarding unfair community development initiative is trade practices, irresponsible advertising successfully adopted by the community? and/or anti-competitive behavior during Please explain in 50 words, or so. the last five years and pending as on end of YES BANK’s community development initiatives are financial year. If so, provide details thereof, driven by its five-pronged approach towards CSR – in about 50 words or so. Promote, Invest, Engage, Collaborate and Monitor. There is no case filed by any stakeholder against the The Bank’s CSR Policy guides the Bank in ensuring Company before Competition Commission or such that its initiatives are mapped to the focus areas and other regulatory authority under the Competition Act, are relevant, effective and replicable. All projects 2002 regarding unfair trade practice, irresponsible have clear feedback mechanisms weaved into advertising and/or anti competitive behavior. them, with a focus on long-term sustainability and active community ownership. 4. Did your Company carry out any consumer survey/consumer satisfaction trends? Principle 9 Yes. As the Bank operates in the highly 1. What percentage of customer complaints/ customer-centric banking sector, customer consumer cases are pending as on the end satisfaction and service quality are of critical of financial year. importance. Guided by the Service Excellence, Branding and Marketing Committee of the Board, the Please refer to page number 254 in this Annual Bank has the systems in place to measure Service Report. Excellence and drive Retail Quality Assurance. The Bank conducts periodic customer satisfaction 2. Does the Company display product surveys, and in addition, there are strong systems information on the product label, over in place for internal checks of branch quality and and above what is mandated as per local physical safety. The Bank’s Complaints Management System is ISO 10002:2004 certified.

Annual Report 2018-19 67 STATUTORY REPORTS Management Discussion and Analysis 69 Directors’ Report 99 Report on Corporate Governance 131

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Management Discussion and Analysis

EXECUTIVE OVERVIEW However, with recent recognition that global growth Macroeconomic and Industry Overview has entered a soft patch, monetary authorities in most developed economies have now diluted their hawkish The cyclical upswing in global economic activity since the policy bias. There is now a growing expectation last quarter of 2016 continued to persist until the middle among market participants that most of these central of 2018, resulting in the highest degree of synchronized banks would either keep their monetary policy rates global expansion during the post-crisis period. unchanged through 2019 or explore opportunities for However, momentum in Global GDP growth started to incremental easing. peter out thereafter, amid broad-based moderation in activity across developed and emerging economies. Looking ahead, it will be critical for policymakers As such, most of the multilateral organizations have and multilateral institutions across the globe to downgraded their World GDP growth estimate for 2019 insulate economic activity from build-up in financial and 2020 in the last two months. Among them, the vulnerabilities and inward-looking trade protectionist most recent (March 2019) is from the Organization for policies, which could impinge on trade flows and overall Economic Co-operation and Development (OECD) that economic productivity. trimmed its 2019 and 2020 World GDP growth forecast by 20 bps and 10 bps to 3.3% and 3.4%, respectively The trajectory of India’s economic expansion behaved in vis-à-vis 3.6% in 2018. line with the global trend. The first half of FY 2018-19 saw GDP growth printing at 7.5%. However, as per While tight global financial conditions in recent quarters implied Central Statistical Organization’s (CSO’s) forecast have engineered a cyclical moderation in the global for the full financial year, GDP growth momentum could economy, heightened geopolitical uncertainty and slip sharply to 6.4-6.6% in the second half of FY 2018-19. ongoing trade tensions have given rise to fat tail risks. Increase in crude oil prices during the course of the As such, volume growth in world merchandise trade financial year to USD 70 pb from USD 56 pb in FY 2017-18 dipped sharply to 2.6% on average annualized basis in and adverse (albeit transient) spillover impact of recent the second half of 2018 from 4.0% in the first half of 2018. tightness in financial conditions for the Non-Banking Financial Company (NBFC) sector provided headwinds Mirroring these concerns, prices of key industrial metals for domestic growth momentum. (barring steel) such as copper, aluminium, lead, nickel, and zinc ended lower in 2018 vis-à-vis 2017. Food prices Despite the moderation in incremental growth were in deflationary territory reflecting supply glut momentum, the silver lining lies in the investment in a few crops globally. Meanwhile, geopolitical space. The CSO estimates India’s Gross Fixed Capital uncertainty and risk aversion resulted in higher prices for Formation to grow at 10.0% in FY 2018-19, the highest crude oil and gold. rate in the last seven years. Sharp improvement in ease of doing business (India’s rank in World Bank’s Ease of On a net basis, the impact of divergent inter-temporal Doing Business Survey has improved sharply from 142 in economic activity was also captured by inflation metrics 2014 to 77 in 2018) has helped turn around investment globally. The first half of 2018 saw inflation moving up in sentiment in the country. The implementation of structural most developed and emerging economies. This, however, reforms like the Goods and Services Tax (GST) and was followed by a phase of disinflation in the later part of the Insolvency and Bankruptcy Code (IBC) framework 2018, something which continues to play out currently. have been of critical importance. While GST collections have lagged the initial budget estimates on account of Monetary policy across key developed economies saw ongoing adjustments in the tax framework, it has certainly incremental acts of normalization coupled with rate widened the tax base. This holds promise for improving tightening measures. While the US Federal Reserve tax buoyancy in the year FY 2019-20. The IBC framework commenced on its journey of quantitative tightening to has churned out closures for 586 Corporate Insolvency reduce its balance sheet size, the European Central Bank Resolution Process (CIRPs) as of December 2018, stopped its quantitative easing. Meanwhile, the Bank thereby helping financial creditors realize` 658 billion in of Japan fine-tuned its quantitative easing operations the due process. The combination of structural reforms during the course of the year. In addition, central banks and some improvement in domestic demand has led to of key developed countries (viz. the US, the UK, Canada, capacity utilization in the manufacturing sector increase Sweden, and Norway) delivered rate hikes during the to a 22-quarter high of 74.9% (on a 4-quarter moving course of 2018. average basis) as of December 2018. Annual Report 2018-19 69 It is expected that this recovery in the investment cycle On the bond market, the 10-year g-sec yield moderated would pick up further post the outcome of general by 3 bps to 7.37% during the course of FY 2018-19. elections in FY 2019-20, supported by the mix of macro However, yields rose sharply during the first half of the and micro reforms in the past. Overall, GDP growth is year on concerns over global and domestic monetary likely to show a marginal acceleration toward 7.2% in tightening and moderated thereafter in the backdrop FY 2019-20 (YBL Forecast) from 7.0% in FY 2018-19. of decelerating inflation and expectations of monetary easing by the RBI. Meanwhile, domestic retail inflation continued to moderate, despite an increase in global crude oil price. Over the course of FY 2017-18, the Indian rupee Average CPI inflation in FY 2018-19 decelerated to 3.4% weakened marginally by 6.2% and closed the year at from 3.6% in FY 2017-18. This will mark the second 69.10 vis-à-vis the US dollar. Rupee weakened significantly successive year of below target (4%) inflation outturn for until October 2018 (wherein it created a record low of India’s economy. This while boosting credibility in Reserve 74.39), but recovered thereafter amid stability in global Bank of India’s (RBI’s) inflation targeting framework, currency market and global risk appetite. would also help in anchoring household and business expectations of inflation. Stability in inflation expectations BUSINESS SEGMENT OVERVIEW is a sine qua non for delivering a healthy and sustainable economic performance over the long-term. Corporate Banking YES BANK’s Corporate Banking (CB) group provided Meanwhile, there was some marginal deterioration in comprehensive financial and risk management solutions India’s twin deficits. The Current Account Deficit (CAD) is to large corporate clients. The Bank’s professional expected to increase to 2.1% of GDP (YBL Forecast) in relationship experts have forged value-based long-term FY 2018-19 from 1.9% in FY 2017-18. More importantly, relationships with the top management and promoters of with moderation in capital inflows, the overall Balance almost all large corporate houses in India. of Payment (BoP) is expected to register a deficit of USD 0.2 billion in FY 2018-19 (YBL Forecast) vis-à-vis a The Bank’s Corporate Banking group offered surplus of USD 44 billion in FY 2017-18. The fiscal front comprehensive client-focused services comprising also saw a slippage for the second consecutive year Working Capital Finance, Term Loans, Corporate Finance with fiscal deficit getting revised higher to 3.4% of GDP Products, Trade & Transaction Banking Products, Cash for FY 2018-19 vis-à-vis the initial estimate of 3.3%. In Management Services, Debt Capital Markets, Treasury FY 2019-20, the Government of India has opted for a Services, Investment Banking Solutions and Liquidity pause in the consolidation process by projecting fiscal Management Solutions, among others. With the deficit to remain unchanged at 3.4%. The fiscal status ‘Ecosystem Banking’ theme, YES BANK focused on the quo is expected to provide some headroom to the central entire customer ecosystem by catering to vendors and government to support rural demand. Meanwhile, it is customers of corporates, thereby ensuring seamless comforting to note that the government has reiterated its service to its customers. commitment to meet the medium-term (FY 2021-22) fiscal deficit target of 3.0%. On the monetary policy front, the RBI YES BANK prioritized credit quality and all offerings were increased repo rate twice by 25 bps each in June 2018 made following a rigorous analysis of the client’s risk and August 2018, taking it to 6.50%. The monetary profile, as well as proactive monitoring of credit, market tightening was premised on hardening of crude oil prices and operational risks. and sharp depreciation in the Indian rupee. However, as disinflationary forces asserted themselves in the second The Bank offered industry-specific products by half of FY 2018-19, RBI reversed course and delivered a understanding customer businesses, market conditions 25 bps cut in the repo rate in February 2019, followed by and industry developments. This distinctive approach another 25 bps cut in April 2019. translated into mutually-beneficial relationships with clients in knowledge-driven sectors such as Life Money market liquidity deteriorated and turned into a Sciences & Healthcare, Information Technology, Food deficit during FY 2018-19 compared to a situation of & Agribusiness, Manufacturing, Infrastructure, Media & surplus in FY 2017-18. The deterioration in banking Entertainment, and Hospitality & Education, among others. system liquidity happened on the back of drawdown of FX Reserves by the RBI to curb rupee volatility During FY 2018-19, the Bank remained committed to and robust growth in currency in circulation. The RBI continuous improvement in service, risk management and undertook active measures to augment primary liquidity product portfolio through original research, benchmarking through open market purchase of government securities and client orientation. and also through the introduction of FX swap auction facility for banks.

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Multinational Corporate Banking of relationships across the Media & Entertainment ecosystem. It encompasses services ranging from YES BANK’s Multinational Corporate Banking (MCB) Structured Financing to Liabilities, to providing a group provided comprehensive client-focused services framework for government policy initiatives. comprising Liquidity Management Solutions; Treasury Risk Management Solutions, Transaction Banking In line with the growth of India’s mid-sized companies, Products – Trade Finance, Cash Management & Digital the ECB group has been growing its presence across the Banking Solutions, Supply Chain Finance, Working country. This segment continues to present a significant Capital Finance, Term Loans, Specialized Corporate growth opportunity for the Bank and the group is well Finance Solutions, Debt Capital Markets and Investment poised to seize this opportunity for the Bank. Banking Solutions to Multinational Corporate clients (MNCs). MCB focused on ‘Ecosystem Banking’ approach by providing banking offerings to entire value chain of Medium Enterprises Banking corporate comprising of vendors, dealers, customers and India has witnessed an accelerated rate of reforms in its employees and other stakeholders, thereby providing the last few years, bolstering optimism in the business comprehensive solution and services. environment. Government initiatives and availability of a skilled workforce have led to the rise of mid-sized The Bank has positioned itself as the preferred corporates across various manufacturing and service ‘host-country’ banking partner to international business industries. This is prominently reflected in the growth of houses. YES BANK extends its best-in-class service the Bank’s Medium Enterprises Banking (MEB) group. expertise, robust technology platforms and deep MEB concentrates on servicing mid-sized corporates with understanding of India’s regulatory framework to guide a turnover ranging from `100 crore to `500 crore. new-to-the-country enterprises about banking. MEB has adopted the concept of ‘Lifecycle Banking’ The Bank has built a self-financed sustainable asset to meet the banking requirements of the mid-sized book for MCB through a strong focus on transaction corporates across all stages of their growth cycle. services, liability mobilization and comprehensive credit The impetus continues to be on servicing clients through analysis of the borrower company’s domestic and a solution-centric ‘Money Doctor’ approach, balancing international businesses. With an unrelenting focus on client expectations and the Bank’s risk mitigation Knowledge Banking, the Bank has emerged as a strategic strategies. With presence across 36 locations covering partner in the India-growth-story of several marquee key regional markets, the Bank’s unique positioning multinational corporates. provides an opportunity to offer the entire product suite with tailor-made solutions. Furthermore, MEB is deeply Emerging Corporates Banking entrenched in new-age entrepreneurship ecosystem emerging across India, by providing customized digital India’s mid-sized companies, driven by strong solutions, incubation and networking platforms to entrepreneurs and supported by resilient tailwinds, E-Commerce and IT & ITeS startups. are well-poised to deliver high growth. The Emerging Corporates Banking (ECB) group caters to the detailed and MEB addresses specific banking requirements of clients exacting needs of India’s dynamic mid-sized companies. by offering innovative solutions that ensure deepening It focuses on corporates with turnover between `500 and retention of client relationships. The group crore and `2,000 crore. ECB group plays a crucial role concentrates on granularity, profitability and capital here by developing a thorough understanding of the efficiency by focusing on referral-led business origination companies’ banking needs and delivering customized and cross-sell. The Bank has developed strong client solutions across the spectrum of banking services. relationships across industries such as Life Sciences, Healthcare, Food & Agri, Auto Ancillaries, and Education. ECB group continues its Knowledge Banking approach to cater to the requirements of growth sectors, including Auto Components, Food & Agri-processing, Media Government Banking & Entertainment, and Pharmaceuticals & Specialty At YES BANK, the Government Banking (GB) group Chemicals. ECB is currently present in 16 cities covering addresses the financial and banking needs of Central and all major regional locations. State Government undertakings, and affiliates. The Media and Entertainment (M&E) practice, a subset of Over the years, the Bank has provided financial the ECB group, is one of the oldest and key knowledge and advisory services to ministries under the Union verticals in the Bank. This knowledge practice has played Government, State Governments, Central and State Public the role of a catalyst in building a marquee network

Annual Report 2018-19 71 Sector Undertakings (PSUs), Boards and other affiliates. Marquee deals of the Group in FY 2018-19: The Bank remains committed to delivering innovative, ▲▲ Acted as Lead Manager (LM) for Public Issue of structured and comprehensive solutions, accomplishing NCDs by Indiabulls Commercial Credit Limited and several landmark transactions with Maharatnas, for Maiden Public Issue of NCDs by Aadhar Housing Navratnas, Mini-Ratnas, and other apex institutions, and Finance Limited developed meaningful relationships with 1,950+ entities across India. The GB group remains committed to the ▲▲ Launched Professional Clearing Services in the core values of client origination, innovation and superior Equity & Currency segment; the Bank is also service, and has over 115 experienced and seasoned expecting approval for its Designated Depository bankers in 56 locations across the country. Participant (DDP) license and its settlement banking services should also be operational in the next YES BANK displayed strong commitment toward catalyzing quarter, completing the product suite for Capital sustainable growth in the country by partnering with Market Intermediaries the Central Government in their flagship events during ▲▲ Incorporated Application Programming Interface FY 2018-19. It further engaged actively with State (API) Banking, a technology which is emerging Governments as Knowledge Partners for their Investment as a key product to integrate and streamline the Summits. The Bank partnered with Ministry of Environment, transaction processing cycle to offer real-time/ Forest and Climate Change for the 2018 World Environment instant banking facility to Non-Banking Financial Day co-hosted by United Nations and Government of Companies (NBFCs), mutual funds, stock brokers, India. The Bank partnered with the Ministry of New and cooperative banks and other financial institutions Renewable Energy and co-hosted the Renewable Energy Start-Up awards with the Ministry to take the country into the next wave of renewable energy space. It signed a International Banking Memorandum of Understanding (MoU) with Government YES – International Banking enjoys a widespread partner e-Marketplace (GeM) as one of the payment banks. network of international banks, financial institutions, exchange houses, and official bodies. Over the years, it YES BANK made concerted efforts toward supporting has executed marquee transactions across products and educational, religious and sporting institutions across geographies through its global banking partner network, India through unique Transaction Banking offerings aimed including large-ticket offshore borrowings for the Bank by at streamlining the working capital management of these tapping unique structures and new geographies. important institutions. YES – International Banking provides a complete suite of Indian Financial Institutions Banking products and solutions such as Trade Finance; Treasury Services, Investment Banking Solutions, Remittance The Bank’s Indian Financial Institutions Banking (IFIB) Solutions, Financial Advisory and Global Indian Banking group interfaces with domestic financial institutions. for its partner institutions and internal stakeholders. The team primarily engages in offering correspondent It has consistently delivered unique and first-to-market banking solutions to domestic banks and banking offerings, leveraging its global alliances. The Bank is solutions to various financial institutions, non-banking among the preferred partners by international institutions finance companies, housing finance companies, asset to meet their clients’ banking requirements in India. finance companies, insurance companies, mutual funds, YES – International Banking, in coordination with small finance banks, payment banks, domestic private Multinational Corporate Banking, helped position the equity funds, cooperative banks, regional rural banks, Bank as the preferred ‘host-country bank’ by capitalizing capital market participants (stock exchanges, stock its rich relationship capital. brokers, commodity brokers, exchanges, and foreign portfolio investors), primary dealers, depositories, During FY 2018-19, the Bank successfully raised a Authorized Dealer II (AD II) license holders, full-fledged three-year syndicated loan facility for USD 400 million money changers and payment aggregators. led by Bayern LB, Commerzbank AG CTBC Bank, First Abu Dhabi Bank, Korea Development Bank, State The Bank actively engages with institutions like National Bank of India, United Overseas Bank and Westpac Bank for Agriculture and Rural Development (NABARD, Banking Corporation, with the total lending consortium Small Industries Development Bank of India (SIDBI), comprising 14 banks from across Asia, Europe and Gulf Export-Import Bank of India (EXIM Bank) and National Cooperation Council (GCC). Housing Bank (NHB) to avail refinance. It also connects with overseas branches of domestic banks to avail foreign YES – International Banking focuses on emerging as currency borrowings and trade credit. a preferred host-country banker and to

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global counterparts. As a result, more institutions utilized in rural, agri and MSME geographies, by establishing the Bank’s network for their India-linked businesses. dedicated leadership, with local know-how and products YES – International Banking has well-established targeted at these specific segments. The Bank is also relationships and a growing wallet share with exchange embracing the ever-evolving technological landscape and houses across key geographies that are host to the Indian complementing its endeavors toward physical expansion diaspora. It includes the USA, the UK, Europe, Asia-Pacific with substantial investments in state-of-the-art new-age (APAC) and GCC, and through these it originates a technologies that will significantly enhance its reach and significant portion of NRI remittances into India. capabilities to optimally acquire and service customers.

International Footprint As a part of its drive to improve customer experience and convenience, the Bank has introduced multiple initiatives YES BANK established its international presence by toward Deposit Mobilization and Customer Service: inaugurating a representative office in Abu Dhabi, UAE, in April 2015. The representative office facilitates a YES AIM: This is a digital account opening platform that host of Banking, Financial and Investment consultation enhances the efficiency of the account opening process services of the Bank in UAE and plays a significant role in and provides consistent and superior onboarding promoting the Bank’s services to the non-resident Indians experience to YES BANK customers. (NRIs) in the country. Additionally, it provides brand value and visibility to the Bank in UAE. YES MSME: The 360° digital banking solution for MSMEs was enhanced to include Goods and Services Tax (GST) YES BANK was the first bank in India to commence payment and simplify the registration process to allow operations at the International Financial Services account setup with signatory personal information. Center (IFSC) in GIFT City, Gujarat, in October 2015. The customer advances and investments of the Bank’s Green Future Deposit: The first-ever Green Deposit IFSC Banking Unit (IBU) is approximately USD 2.75 billion product was launched on World Environment Day, 2018. as on March 31, 2019. GIFT-IFSC Banking Unit (IBU) Deposits raised are used for lending toward Sustainable provides comprehensive solutions for the Bank’s clients’ Development Goals (SDGs) aligned sectors. foreign currency banking requirements in the domains of Cross Border Trade offerings, External Commercial Instant FD: YES BANK further enhanced its YES ROBOT Borrowings and Foreign Currency Loans/ Syndications platform to allow instant Fixed/Recurring Deposit booking, and Arrangement/ Underwriting of Masala Bonds an industry-first offering. issuance by Indian Corporates, among others. Smart Pe: A 100% digital, comprehensive and The Bank repurchased bonds aggregating to a face customized payment and collection solution. Smart Pe value of USD 122.85 million out of the USD 600 million provides collection through all offline/online modes, easy bonds issued in February 2018 under its Medium-Term on-boarding, quick modular integration across APIs, Note (MTN) program. rendition through web portal and mobile application as well as real-time dashboards. This was done as part of IBU’s continuing capital management program and to further optimize the liability The Bank has also strengthened its front-line capabilities structure and demonstrate availability of adequate foreign through the introduction of a new sales-force efficiency currency liquidity. and content platform, Eltropy. This digital content platform allows customer-facing teams to access product and Branch Banking process information on-the-go, which may also be shared with clients through multiple messaging modes like SMS, During FY 2018-19, YES BANK’s geographical email, and Whatsapp. footprint expanded to 1,120 branches and 21 Banking Correspondents (BC) banking outlets spread across All-New Debit Card Variants 740 locations with 1,456 ATMs and Bunch Note Acceptor/Recycler (BNAs). The Bank continues to build YES BANK upgraded its existing portfolio of Debit Cards on the deeply institutionalized strategy of strengthening with the introduction of Near Field Communication (NFC) its presence across all State Capitals, Top 200 Deposit technology across card variants to enable contactless Centers, Delhi-Mumbai Industrial Corridor, Special payments. Segmented across its flagship customer Economic Zones, Economic Promotion Zones, Food Parks, segments, YES Prosperity and YES FIRST, these cards Agri-Parks and Ports, among others, with a well-balanced have been carefully customized and designed around parallel focus on financially-efficient Inclusive Banking. the specific needs of Debit Card customers. The new The Bank considerably focused on branch penetration Debit Cards offer unique benefits such as reward points

Annual Report 2018-19 73 on all spends, NFC-enabled contactless payments, Payment Service (IMPS) and is counted among the top complimentary lounge access at domestic airports on three players in both the payment systems. selected Debit Card variants, MasterCard Golf lesson on YES FIRST range of Debit Cards and YES InControl - card The Bank is creating Centers of Excellence for Robotics spend management features. The YES Prosperity Debit and Analytics that shall play a vital role in reducing service Card range comprises YES Prosperity Titanium, Titanium time and enhancing customer interactions quality, which , Platinum and RuPay Platinum Debit Cards, whereas are the key customer delight elements. Digital Payments the YES FIRST range includes the YES FIRST WORLD Debit is another area, where the Bank has been focusing to gain Card. The Bank will issue these cards to all new customers, leadership position. The Bank has plans to scale other and also focus on offering them to its existing Debit Card payment services like IMPS, Bharat Bill Payment System customers. The Bank is also planning to launch a new (BBPS) and Prepaid Payment Instruments. The Bank Debit Card variant ‘YES PREMIA WORLD Debit Card’ for has been working with multiple State Governments and its customers in YES Prosperity and YES FIRST segments. Municipal Corporations by offering customized solutions and subsidy management platforms, thereby contributing ATMs/Recyclers to the Prime Minister’s Digital India and Smart City Mission. The Bank has been selected to partner with Maharashtra, YES BANK has 1,456 ATMs and Bunch Note Acceptors/ Rajasthan, Telangana, Haryana and Chhattisgarh State Recyclers (BNA) as of March 31, 2019. BNAs have Governments for various projects. YES BANK has also been appreciated by many corporate clients as they been selected to implement customized smart city offer multiple advantages while fulfilling corporate cash solutions for Coimbatore, Thoothukudi, Puducherry, collection needs. The Bank has become the first Private Warangal, Diu, Silvassa, Nashik and Rajkot Smart Cities. Sector Bank to go live on Interoperable Cash Deposit platform and now YES BANK BNAs/recyclers can be used Point of Sale (POS) for depositing cash into any other bank account. The Bank is also the first to offer recharge codes for Google Play YES BANK Merchant Services has always focused on its ATMs. YES BANK ATMs now offer a wide array of on implementing latest technology. It has adopted services right from Cash Withdrawals to Mobile Recharge comprehensive Merchant Management System, which Payments, as well as YES BANK Credit Card Bill Payments. provides a seamless onboarding and transaction processing experience. The new system complements Digital Banking the Bank’s current product suite of GPRS, PSTN, MPOS, PCPOS and NFC-enabled terminals, along with Bharat YES BANK has continued investing significantly in new-age QR code. YES BANK is one of the fastest growing mediums and digital technologies to achieve heightened market players in the POS business with its terminal customer engagement and experience. The Bank realizes base growing by 1.6x over the previous financial year to that ‘digital’ is steadily growing as a preferred medium 1,05,000 terminals spread across 300 cities, covering for customers to avail banking services. Therefore, it various sectors and segments. has invested in upgrading core systems like CBS, Debit Card Switch, Mobility Platforms and Chatbots. The Bank Currency Chest will continue to invest in system upgradations for the next 12-18 months to create a next-generation banking The Bank is expanding its network of Currency Chests platform, which can provide unified digital experience and Small Coin Depots. Currently, it has two Currency across internet, mobile, voice and bot channels. Chests operational in Delhi and Mumbai, with a few more on the anvil. The establishment of Currency Chests The Bank has pioneered the implementation of ‘Bot’ reflects YES BANK’s support to Reserve Bank of India’s technology for customer acquisition, personal banking (RBI’s) endeavor to increase the efficiency of currency assistance, cross-selling and customer servicing for management in the banking system. During FY 2018-19, various businesses. Unlike other Bots, which largely the Bank ensured optimum supply of fresh/issuable restrict users to explore services or seek product currency across all touchpoints. information, YES BANK’s Bot also allows customers to transact over chat. Further, as Aadhaar proliferated, the Contact Center Bank launched Aadhaar-based Banking and Payment YES BANK has a dedicated 24/7 inbound contact Services (AEPS and Aadhaar Pay). Currently, YES BANK center for Liability, Asset and Credit Card customers to commands a leadership position with close to one-third resolve queries, complaints and service requests in three market share of Aadhaar Enabled Payment System (AEPS) locations, Mumbai, Chennai and Gurgaon. The contact acquiring space. The Bank continues to build use cases center offers multilingual services in English and regional around United Payments Interface (UPI) and Immediate languages. The contact center includes a dedicated

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24/7 desk for Super Premium Credit Card, MasterCard on-the-go. Overdraft facility against Foreign Currency World Elite and Concierge services for niche clients. Non-Repatriable (FCNR) Deposits was launched to help Apart from rendering services, the contact center also NRI customers meet their urgent financial requirements. seeks prospects from interested customers on additional The Bank strengthened its Portfolio Investment Scheme products of the Bank, including Term Loans, Retail Assets, (PIS) offering by launching Power of Attorney facility for CASA and Credit Cards. In compliance with regulatory custodians/brokers. The Bank also organized the NRI directives, a dedicated desk for customers wishing to Festival FY 2018-19 to enhance visibility of YES BANK’s reach the Senior Management is available. Additionally, NRI Services by engaging with various NRI associations, the contact center piloted agent-assisted chat, as an clubs and societies across the country and overseas. option for those customers who write to the Bank’s email Its representative office in Abu Dhabi completed three id [email protected] years of operation and has contributed to making UAE YES BANK’s largest market for GIB business. YES FIRST Rural and Inclusive Branch Banking The YES FIRST Program is the flagship offering for the High Net-worth Individuals (HNI) segment of the Bank’s YES BANK now has a well-entrenched presence in customer base. It encompasses best-in-class products the rural and semi-urban segment with an exhaustive across liabilities and assets, along with a comprehensive network of over 400 banking outlets. The Rural and suite of wealth management solutions. The relationship-led Inclusive Branch Banking vertical today comes with a proposition is coupled with state-of-the-art debit and wide array of customized product propositions across credit card offerings that provide a host of leading features liabilities, assets and third-party insurance and investment catering specifically to the needs of this segment. segments. YES BANK has launched differentiated asset products in farmer finance, allied agriculture finance, YES PREMIA farm mechanization finance and micro-enterprise finance space to cater to the multi-faceted needs of the ‘RURBAN’ The Bank recently launched ‘YES PREMIA’ as a dedicated customers. The Bank continues to proactively engage offering for the affluent segment of customers, positioned with the local community and has conducted over 2,350 between the existing YES FIRST and YES Prosperity financial literacy camps in the rural and semi-urban programs of the Bank. It addresses the needs of both geographies in FY 2018-19. individual and non-individual customers. Having attained a critical mass of affluent customers, the Bank identified the requirement to create a separate strategy, which Credit Cards entails providing cutting-edge solutions across products The Bank launched the Commercial Cards product line and services, including but not limited to an industry-first marking the completion of its offerings across retail, SME debit card and a dedicated relationship manager. and commercial card segments. Commercial Cards cater to Business-to-Business (B2B) spends of corporates Furthermore, the Bank has developed an industry-first and offer yet another rich engagement opportunity to analytical algorithm model, which provides talking further deepen the Wholesale Banking relationship. points to the relationship managers. The model is aimed Products in this segment include Corporate Cards for at improving customer engagement and cross-sell. travel and entertainment expenses and Purchase Cards This model has also been bestowed with the Aegis for payables and receivables management. The Bank now Graham Bell Data Science award for innovation in the offers a wide range of 13 Credit Card product variants Banking, Financial Services and Insurance (BFSI) sector. across its flagship customer segments of Yes Private, YES FIRST, YES PREMIA and YES PROSPERITY. This range Global Indian Banking of portfolio is backed by a highly effective Alliance and YES BANK offers best-in-class banking products Loyalty program, digitized acquisition and servicing and services for Indians settled across the globe platforms, and above all, a very robust and effective and strives to continually enhance these offerings. credit-management framework. With 5+ lakh Credit Cards FY 2018-19 witnessed a host of developments across issued and monthly spends of above `400 crore, the Bank the Bank’s Global Indian Banking (GIB) proposition. is poised to significantly scale its Credit Card business. The Bank accelerated its digital interface with the launch The cards are designed to offer superior benefits on the of YES Robot, which provides real-time responses back of world-class technology, class-leading alliances to customer queries. The Bank has augmented its and partnerships. Backed by a consistent and superior inward remittance solution—YES Remit—for NRIs based service experience, the YES BANK Credit Cards program out of Canada and introduced a state-of-the-art user has been orchestrated to be the card of choice for the interface—YES Remit mobile app—which enables access Bank’s customers.

Annual Report 2018-19 75 Retail Banking Assets knowledge-banking experts and an extensive network delivers unmatched one-stop service to small enterprises, YES BANK expanded its product offering by aligning addressing their end-to-end requirements. Working Capital under Micro Enterprises Banking Group (for customers with turnover of up to `15 crore) within the overall Retail Banking Assets Group. This will help PRODUCT CAPITAL the Bank to strengthen its retail offering and enhance Transaction Banking customer satisfaction. The Bank’s customers can select a wide range of Retail Loan products like Affordable Home The Transaction Banking Group (TBG) specializes Loans (YES KHUSHI), Home Loans, Car Loans, Super in core banking offerings across Cash Management Bike Loans, Commercial Vehicle Loans, Construction Services, Capital Markets and Escrow Services, Trade Equipment Loans, Loans against Securities, Gold Loans, Finance and Services, Structured Trade & Supply Personal Loans, Secured Business Loans, Health Care Chain Finance, Foreign Exchange Services, Bullion and Finance and Printing Equipment Finance, along with Digital Transaction banking. It provides these services Working Capital under one roof. This will help the Bank in under the aegis of the YES Transact brand. The team increasing wallet share of customers with a 360-degree comprises domain specialists from diverse backgrounds approach. The Bank has entered into Preferred with significant experience in product innovation, who Financier agreement with leading manufacturers of cars, interact with customers to understand and address their commercial vehicles and construction equipment, thereby strategic financial and operating requirements in the providing access to the wholesale and retail business of following domains: manufacturing dealers across India. The Bank currently ▲▲ Working Capital and Liquidity management offers retail products across 68 locations in 490 branches. ▲▲ Treasury integration Small Enterprises Banking ▲▲ Risk management Small enterprises are central to India’s economic ▲▲ Inbound and Outbound remittances development – in the middle of a rapid economic ▲▲ Supply Chain Finance solutions, including Factoring transformation into a major global manufacturing and services hub. To efficiently serve the small enterprises ▲▲ Customized and innovative solutions, including throughout their lifecycle, YES BANK has adopted integrated API Banking solutions for assisting a focused ‘Lifecycle Banking’ approach to provide process automation and/or integration with the industry-specific and need-based financial solutions. customer’s systems ▲▲ Regulatory and International Trade Advisory, The Small Enterprises Banking (SEB) serves enterprises including current and capital account transactions with a turnover in the range of `15 crore to `100 crore. YES BANK’s relationship managers, product specialists ▲▲ Digitized solutions for Domestic and Cross-Border and industry experts focus on providing continuous Trade transactions support and solutions to small enterprises at every stage ▲▲ Digitized solutions for Central and State Government of their business lifecycle, considering the constantly entities evolving business environment for them. ▲▲ Bullion Sales and Gold Metal loans The unique ‘Knowledge Banking’ expertise with an ▲▲ Product management for IFSC Banking unit based ‘Inclusive Banking’ approach toward serving the needs in Gift City, Gujarat, across all permissible product of small enterprises acts as key differentiators for segments YES BANK. The Bank is consistently working toward making the banking experience more convenient ▲▲ Foreign Exchange Services across cross border by introducing simplified products, implementing remittances for Exchange Houses/Authorized digitization and reducing the overall Turn-Around Time Dealers, Foreign Currency Notes (TAT). The Bank has also developed long-standing and meaningful associations with FinTech firms in this domain. The Digital Transaction Banking team offers innovative It has inked MoUs and partnered with various Government digital solutions by designing, developing and co-creating bodies to provide easy and inclusive financial assistance, products with corporate customers, global banks and ensuring that the customers have access to best-in-class exchange houses, several times, besides ‘future-proofing’ schemes and benefits. the Bank’s business model.

This differentiated positioning, along with The Bank concentrates on process digitization with the customized solutions, dedicated relationship team, ultimate aim of providing a superior customer experience.

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The group has strengthened its focus on its digital the Bond Market in India while introducing numerous strategy by building synergies among different product first-time issuers to Corporate Bond Market. verticals, enabling unique opportunities to its clients. The state-of-the-art Corporate Net Banking (CNB) online During FY 2018-19, YES BANK’s DCM business platform provides comprehensive digital coverage across successfully executed debt capital raising transactions Cash Management, Trade Finance and Supply Chain for several companies across diverse sectors, including Finance solutions to corporate clients and their constituents. media, renewables, metals, cement and pharmaceuticals. The transaction structures ranged from vanilla NCDs to YES BANK has been building on its successful API Banking structured debt issuances, including renewable asset product—bespoke integration between Corporate and the pooling structure, share-backed NCDs, securitization of Bank’s internal systems with infinite possibilities—by adding infrastructure assets and bank Tier II capital. more services under this channel. API Banking can be used in varying combinations to co-create unique solutions for FY 2018-19 marquee transactions are: YES BANK’s corporate customers. The Bank has been at ▲▲ Sole Arranger for India Grid Trust’s maiden NCD the forefront of digital innovation, with API Banking being issuance of `250 crore: ‘First-ever bond issuance the flagship product suite. Since the introduction of API by an Infrastructure Investment Trust (InvIT) in India’ Banking in September 2015, it has grown significantly with over 12 API sets and 700+ client implementations, ▲▲ Sole Lead Arranger for NRSS XXIX’s maiden NCD seemingly largest by any bank worldwide. issuance of `3,000 crore: ‘Single largest bond issuance by a Transmission Company in India’ The Bank recently instituted a ‘Corporate Service ▲▲ Lead Arranger for Green Infra Wind Energy’s maiden Excellence’ unit, which will provide superior and NCD issuance of `1,000 crore: ‘Maiden bond seamless customer service experience to enhance its issuance by a Sembcorp Group entity in India’ service proposition. ▲▲ Joint Book Runner for Renew Power’ USD 375 YES BANK has won several national and international million 144A/Reg S Green Bond offering awards and accolades in FY 2018-19, as a testimony to this group’s best-in-class offerings, including the Best YES BANK was ranked No. 3 by Prime Database in Trade Finance Bank in India and Best Bank for Payments the ‘Private Issuers – Manufacturing’ Category of the in India from the Asian Banker. Arrangers League Table and was ranked No. 5 in the ‘All Issuers Category’ League Table by Prime Database Financial Markets for FY 2018-19. Further, the Bank was ranked No. 5 by Bloomberg in the India Domestic Bonds League The Financial Markets (FM) Group at YES BANK is Table for CY18. backed by experienced professionals and best-in-class technology and offers a comprehensive range of financial The Bank is a Primary Dealer (PD) for the Government market products and services to its clients. of India’s securities and as part of this mandate underwrites and bids for these securities in auctions held The Foreign Exchange (FX) Sales business provides spot by the RBI. The PD desk actively trades and distributes and derivative products for efficient hedging of Foreign dated securities, T-bills and State Government Bonds, Currency and Interest Rate exposures of the Bank’s thereby encompassing the complete suite of Sovereign Institutional, Corporate, SME and Retail customers on a Debt Products. need basis. During FY 2018-19, the Bank operationalized a new workflow and internal FX rate booking system for The FM Group also conducts proprietary trading to smoother and faster processing of remittances, which maximize earnings by optimal risk-taking across fixed helped in reducing turnaround times (TATs), and thereby income and global foreign exchange markets. Additionally, enhancing customer experience. Online FX rate booking it is responsible for Balance Sheet Management, Liquidity platform was also extended to SME and retail customers Monitoring, Maintenance of Cash and Statutory Reserve to facilitate a faster rate booking experience. requirements and day-to-day Fund Management of the Bank. Subordinated and hybrid debt capital for the The Bank’s well-established and buoyant Debt Capital Bank is also raised by the FM Group. Moody’s Investors Markets (DCM) business originates and distributes onshore Service (“Moody’s”) affirmed the Bank’s rating of Ba1 Non-Convertible Debentures (NCD), offshore Masala and (Stable outlook). ICRA Limited (Moody’s affiliate in India) Foreign Currency (FCY) bonds, Commercial Papers and has reaffirmed the Bank’s A1+ rating for its `20,000 other Structured instruments. YES BANK continues to crore Certificate of Deposit program, which indicates the be an active market maker in the Indian Corporate Bond highest level of safety in the short-term. Also, the Bank’s market, and has been a leading contributor in deepening long-term rating is AA- (for Basel III Additional Tier I,

Annual Report 2018-19 77 Basel III Tier I and Upper Tier II)/AA (for Basel III Tier II, under the Securitization Act, 2002, using various enablers Lower Tier II and infrastructure bonds)—rating watch with from extant RBI policies and selling non-performing assets negative implications—by ICRA Limited; AA (for Basel III to Asset Reconstruction Companies (ARCs). Additional Tier I)/AA+ (Basel III Tier II and Infrastructure bonds) (Negative outlook) by India Ratings and Research Inclusive & Social Banking and Pvt. Ltd.; AA (for Basel III Additional Tier I, Basel II Tier I and Upper Tier II )/AA+ (for Basel III Tier II, Lower Tier II Microfinance Banking and Infrastructure bonds)—credit watch with developing YES BANK promotes microfinance as a critical asset class implications—by CARE Ratings Limited; and AA+ (for in line with its Responsible Banking vision to mainstream Basel II Tier I, Upper Tier II and Lower Tier II)—credit watch sustainability within its core business and address the with developing implications—by Brickwork Ratings. needs of the ‘next billion’ customers. It has a two-pronged strategy involving special divisions: Microfinance Banking Loan Syndications (MFB) and Inclusive and Social Banking (ISB) to help this segment grow through design and implementation of The Loans Syndication (LS) team has created a strong various financial inclusion initiatives. At the Bank, financial brand equity across stakeholders including Banks, inclusion is not just a social and regulatory obligation but NBFCs and other financial institutions. Over the years, a viable business opportunity. the team has demonstrated strong credit appraisal and structuring skills as well as sectoral knowledge, which has ISB and MFB had the mandate to reach the unbanked been well appreciated across the stakeholder spectrum. and underbanked population in rural, semi-urban and The team has consistently distributed strong corporate urban areas with the objective to leverage technology loan exposure to banks and financial institutions, and foster key partnerships to amplify their impact improving capital churning and effective yields on the through relationship capital in the public, private and Bank’s advances. social sectors. They aimed to create viable business models while providing ‘access to finance’ to the The LS team has successfully placed underwritten bottom-of-the-pyramid customers. deals aggregating to approximately `26,000 crore in FY 2018-19, significantly improving Return on Equity MFB fulfils the agenda of financial inclusion by catalyzing (ROE) on underwritten transactions for the Bank. the growth of the Indian Microfinance industry with The portfolio comprises of pedigreed players across the an elaborate product suite. It includes Term Loans to manufacturing, renewable energy, roads, airports, power Microfinance Institutions (MFIs) for further on-lending, transmission, ports and real estate sectors. cash management services, loan syndications and rated capital market loan products like pool securitization, Pass The team’s consistent performance has placed the Through Certificates (PTCs). The MFB division caters to the Bank among the top three syndication house for CY18 financially marginalized communities by extending these (domestic currency segment) in the League table ranking services through 37 major clients, which are essentially by both Bloomberg and Thomson for India. Microfinance Institutions (MFIs) spanning 29 states.

Asset Reconstruction and ISB, under the aegis of Frugal Innovations for Financial Inclusion, has its flagship program – ‘YES Livelihood Management Group Enhancement Action Program (YES LEAP)’. Under this YES BANK’s Asset Reconstruction and Management program, the Bank partners with Micro Finance Institutes Group (ARM) was created for the effective management (MFIs), which are credible NGOs/private institutions of distressed and non-performing assets comprising and appoints them as Business Correspondents (BC) to qualified and experienced professionals specializing provide financial services (Credit, Savings and Insurance) in distressed asset management. The Group provides to women Self Help Groups (SHGs)/Joint Liability Groups effective solutions for resolving stressed assets by (JLGs). This allows the Bank to leverage its BC partners’ leveraging its rehabilitation, regulatory and legal extensive footprint and scale its product and service understanding. offerings for the bottom-of-the-pyramid population at their doorstep. Since inception of the business, with the The ARM Group employed multi-pronged resolution help of over 40 BC partners, the unit has cumulatively strategies, which included operational and financial financed over `8,500 crore and has reached out to 25 restructuring, identifying strategic investors for takeover lakh families in rural and semi-urban India, spanning of stressed assets, business turnaround financing, 260 districts. In FY 2018-19, ISB has also launched a negotiating with borrowers for one-time settlement, customized group insurance product – YES SHIELD for recovering through the enforcement of security interest the YES LEAP clients. As 100% of groups associated with

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the YES LEAP program are women-centric, YES LEAP difficult to set up a Bank Branch, thereby contributing has been able to contribute significantly toward towards the Bank’s Financial Inclusion goals. The Bank strengthening women entrepreneurship and, paving the leverages innovative digital solutions such as Micro ATMs way for women empowerment even in remote areas of for providing banking services in these outlets. India. Being considerate about the needs of this segment, ISB has further launched YES SMILE (Specialized ISB has also been propagating financial literacy for Micro Individual Loan for Enterprises) for the upgraded customers as a part of its curriculum and everyday microfinance clients who have the aspiration to grow operations. This way it can cater to the vulnerable their micro business. This Micro Individual Business segments of the society that are susceptible to financial Loan is aimed at provided higher ticket size loans to the frauds. ISB follows a model which ensures that there is graduated microfinance clients and help them flourish in ample opportunity of customer interaction with the BC their existing business. staff, as well as the Bank staff. To maximize communication with the clients, short story-based push call messages on YES BANK uses a customized, semi-automated loan financial education topics are designed in collaboration origination and loan management system, Ganaseva, with AwaazDe and sent to the clients in vernacular to enhance its impact and delivery mechanism. languages. To further encompass all financial services and Ganaseva offers flexibility to build adequate regulations, best practices to clients, a customized, extensive financial required risk controls, and enables real-time tracking of all literacy module has been designed in collaboration with activities in the system. It also provides high quality and Accion International. The Bank’s feet-on-street staff and informative reports with data analytics. the last mile BC staff use it for training customers in remote and underbanked/unbanked areas. In line with the Bank’s digital focus, continuous digital interventions have been undertaken such as digital field Over 70,000 clients have been provided basic financial reporting with real-time GPS tracking of field staff through literacy training with the help of these modules. Microsoft Kaizala app, digital training modules, cashless transactions and others. The Bank also launched an YES BANK curates these interventions carefully onboarding app through Karvy, making a significant for the underprivileged and financially excluded move toward paperless documentation and digitization. section of the society to accelerate financial inclusion The new app will increase transparency and credibility, in the country. resulting in reduced TAT and better customer experience. The ISB team is also mandated with the implementation Taking a cue from the RBI guidelines on Rationalization of the Bank’s Financial Inclusion Plan (FIP) as approved of Branch Authorization policy regarding BC Banking by the Board and the RBI. The Bank performed well Outlets, YES BANK opened 21 new BC operated Banking across almost all financial inclusion parameters and its Outlets (BCBOs) in select un-banked rural locations. radical FI4FI approach received several national and This has enabled the Bank to provide customized international accolades. banking products and services in locations where it was

Annual Report 2018-19 79 Spearheading Financial Inclusion

Roll out Roll out Introduction YES Money Roll out of Roll out of of Urban of Rural of Mobile Multi- YES LEAP YES YES Sahaj YES BANK Roll out Financial Financial Technology channel Livelihood mobile commences of YES Inclusion Inclusion for Remittance Enhancement transaction operations SAMPANN Program Program Transaction service Action Program device

Aug Oct July Sept Oct June Sept Mar 2004 2006 2007 2009 2010 2011 2011 2013

Mar Feb Apr Oct Nov Jan Dec Feb 2019 2019 2018 2017 2016 2015 2014 2014

Launch of Karvy Financial Launch of Cashless CSR Launch of Roll out of YES SHIELD onboarding Literacy GANASEVA Disbursements Activities EFIMO – Loan YES JLG - Micro App Program in – Loan for Management Program Insurance collaboration Management community System System Product with ACCION development International Launch of Tie-ups: ADB YES SMILE Loan and TA – Micro Grant Individual Business Loan Product

Agri Product Management mitigates the inherent risks through mark-to-market of commodity prices and regular audits. The Bank’s other The Food and Agribusiness (F&A) sector is a sunrise focus area has been the emerging segment of Farmer industry, which is fuelling the growth of an emerging India Producer Companies (FPC), wherein it partners with and is of strategic importance to the country. With the select FPCs with sustainable business models, in an effort Government of India’s impetus on the F&A sector, it is set to create a sizeable and profitable portfolio. to take a quantum leap, thereby creating innumerable opportunities for the entities associated with it. With an objective of harnessing the innate potential of the F&A PROCESS, SERVICE & sector, YES BANK has institutionalized a specialized TECHNOLOGY OVERVIEW vertical, Agri Product Management (APM), which houses Service and Technology Capital industry and banking professionals with the relevant domain knowledge and skill sets. The team interacts YES BANK undertakes various tech-enabled business closely with F&A clients to create structured lending initiatives to deliver improved customer experience, ease propositions for agri value chain participants, including of banking and operational excellence, thereby enhancing farmers, MSMEs, as well as corporates. APM aims to customer delight. The Bank adopted an omni-channel facilitate the building of banking opportunities in the approach to capitalize on the increasing ways to agri value chain through structured financial products connect with customers and the rising importance of that are regulatory compliant, while mitigating credit risk. self-service channels as the primary way of banking. It has The APM team is also responsible for ensuring that the leveraged state-of-the-art technology to enable customer Bank meets the regulatory Priority Sector Lending (PSL) accessibility of all products across various channels norms, in collaboration with the other business units, through seamless multi-channel integration. The Bank which generate PSL assets. As a part of agri value chain has been simultaneously focusing on implementation of financing, the Bank has created a robust portfolio against innovative practices in digital banking and digitization of pledge of agri commodities while ensuring adequate end-to-end processes, to provide customer accessibility risk mitigation. Within APM, a specialized team closely of all products across all channels. monitors the commodity pledge financing portfolio and

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Technology is a key enabler and facilitator of the ▲▲ The Bank has successfully upgraded to new ISO critical goals of the Bank, allowing it to make systems 9001 (Quality Management) standard and adopted and processes even more efficient. Since inception, risk-based thinking, thereby aligning itself with the YES BANK has continued to invest in technology to provide Enterprise Risk Management (ERM) Framework. better products and superior customer experience. ▲▲ The Bank has strengthened its Business Continuity The Bank continues to spread its electronically linked Management framework (ISO 22301-certified) and Branch Network with state-of-the-art IT-enabled core Information Security Management framework (ISO banking platform to ensure customers have access to 27001-certified) by including two Data Centers, five 24/7 banking services. Branches, including their ATMs, apart from the two existing NOCs. Business Processes – Creating A ▲▲ Business Excellence frameworks and Quality Quality Organization Management Practices such as Five S, Lean and YES BANK continues to refine its operational processes Six Sigma, and ISO 9001 standards established for to implement best practices and risk identification and back-office operations at NOCs, 101 key branches containment, which will enhance precision in operations and the Bank’s Collections Unit for Micro Enterprise of both Corporate and Retail businesses. Banking, Retail Asset & ISB and Credit Card Risk Management & Operations have been certified The Bank seamlessly extended its professional approach to under ISO 9001 (Quality Management System). business processes, resulting in continuous improvement ▲▲ The Bank’s complaints management processes in its pursuit of building a quality organization. have been certified under ISO 10002 (Customer Service – Complaints Management system). The Key initiatives in FY 2018-19 were: Bank used the Complaints and Query Management ▲▲ The Bank has deployed an enterprise-level framework as a singular touchpoint to log, handle, Customer Relationship Management solution, which escalate and resolve customer grievances. provides it a single view for both Corporate and ▲▲ YES BANK consistently measures Customer Retail customer segments. A lead management Experience (internal and external) to ensure system has been built for the sales team to enhance customer feedback across each touchpoint their productivity. (including customer complaint registers, customer ▲▲ Centralized back-office functions, National satisfaction surveys, transactional interactions, Operating Centers (NOC) of various businesses are telephonic surveys and employee feedback) is working in full capacity at Mumbai, Gurgaon and collected, analyzed and acted upon. Chennai, covering over 4 lakh sq. ft. of office space ▲▲ The Bank has digitized transaction processing in and employs 9,000 people. critical functions for straight-through processing and ▲▲ The Bank has a dedicated 24/7 inbound Contact enabling paperless transactions. Center for Liability, Asset and Credit Card customers, ▲▲ The Bank leveraged social media as a new channel which resolves queries, complaints and service for superior customer service to address queries/ requests in three locations namely Mumbai, Chennai complaints, receive feedback and garner inputs on and Gurgaon, offering multi-lingual services. The service (Voice of the Customer – VOC). Bank also has a dedicated 24/7 desk for Super Premium Credit Card, MasterCard World Elite and ▲▲ The Bank adhered to Banking Codes and Standards Concierge, providing bespoke services for clients. In Board of India (BCSBI), Goiporia Committee compliance with regulatory directives, a dedicated recommendations, Damodaran Committee desk for customers wishing to reach out to Senior recommendations and the Committee on Procedures Management is also available, details of which are and Performance Audit of Public Services (CPPAPS) available on the website. guidelines, thereby ensuring compliance across its critical functions. ▲▲ Since October, 2018, YES BANK has extended chat services to customers who contact through email. A ▲▲ As part of Insta Gratification spirit, the Bank has centralized welcome calling desk has been setup taken an initiative to provide fast-track processing since August 2018 to provide seamless onboarding (within two hours) of key customer requests. experience. ▲▲ The Bank is in the process of implementing ‘Robotics ▲▲ The Bank’s Inbound Contact Center was Process Automation’ to optimize internal processes recently conferred with ISO 9001 Certification in with a view to provide faster and accurate services. December 2018.

Annual Report 2018-19 81 Embedding a Continuous performance across key service drivers. These initiatives Improvement Approach were managed through the Innovation Center, which acted as a clearing house for ideas that helped the YES BANK’s Quality Assurance and Service Delivery Bank implement ‘next practices’ across products, Units provided a framework that facilitates continuous services and channels. improvement. The Quality Policy at the Bank states, ‘YES BANK will strive to ensure consistent superior service Specific quality goals were classified across the categories experience through operational excellence, innovation, of Process Management and External and Internal cutting-edge technology, best-in-class systems and Service Delivery in line with the Bank’s Quality Policy and processes in its mission to become ‘The Finest Quality Objectives. Quality improvement drives, like workforce Large Bank of the World in India’. suggestion schemes, Lean Six Sigma, Five S, ISO 9001 and ISO 10002 certifications were implemented across The Service Quality Strategy business units and branches. The Service Excellence & Quality Assurance teams take Being a member Bank, Service Excellence team up focus initiatives under the framework of Lean and proactively engages with all the customer facing channels Six Sigma integrated methodology toward improvement to ensure compliance with the BCSBI code. This has of service and process standards. The team actively enabled the Bank and its service delivery processes to engages with customers across various channels to be more robust and customer friendly. capture the feedback, which is analyzed before being taken up for improvements. At the Bank, external and internal service delivery (customer satisfaction) was measured using dashboards, The complaints management team partners with Voice of the Customer (VOC), Branch Service Committee respective units and conducts Root Cause Analysis on an Meetings, and External/Internal Customer Satisfaction ongoing basis to address repeated issues. Surveys. These initiatives not only helped build mutually-beneficial customer relationships, but also YES BANK’s Service Quality infrastructure is built on ensured stringent Service Level Agreements (SLAs) the world-renowned Plan–Do–Check–Act (PDCA) across the Bank. model of Deming’s improvement cycle. Under this, the Bank’s branches are visited by specially skilled quality The YES Service Program, an internal service proposition, professionals for a detailed review of the service delivery disseminated through a defined and ongoing service processes. This entails assessment, gap identification, marketing program, and measured through mystery root cause analysis, action plan and execution. The entire shopping, on-job monitoring and Branch Executive process is closed looped with actionable and closures. Leadership Team (BELT) programs, were held periodically across key branches. eiene The Bank undertook several strategic and tactical improvement projects during the fiscal year.

The leadership of each business unit reviewed existing processes, initiated improvements and instilled B procedural orientation. Within a short period, the Bank ee nged e has been recognized as ‘world-class’ in the Service Category by Asia Pacific Quality Organization. The Bank is also the only Indian Bank to win this prestigious global ai award based on Malcolm Baldrige Business Excellence Innain ane Framework (USA).

Some of the Key Award in Quality, Customer Service and Best Practices: The Bank’s three-pronged structure to bolster customer 2018 CII Award for Active Customer Engagement’ – service comprises customer experience, innovation (Service) – CII and quality assurance. The Customer Experience unit captured the Voice of the Customer (VOC), and assessed

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Information Technology Mesh using Kubernetes, Google Istio and other latest technologies). As part of the first phase, Technology Absorption YES Genie creates a single view of customers (I) Efforts Toward Technology Absorption across all banking relationships with the Bank. Besides, it allows a call-to-action enablement The advancements in Information Technology (IT) to assist in delivering services. have led to accelerated development in newer technologies, resulting in higher demand for digital ▲▲ YES Bank Datathon: This initiative was solutions to create alternative banking products that launched with the objective of crowd sourcing deliver customer delight through a better service ideas and building an augmented data science delivery framework. team for the Bank. In the 1st edition, YES BANK received an overwhelming response with over Since inception, YES BANK has been at the 6,000+ applications. The key outcomes of the forefront of technology innovation and adoption, YES BANK Datathon’s 1st edition were building and will continue its focus on technology. This will data model prototypes for the Next Best Action enable the Bank to build a more secure, resilient, model (predicting a next-best action of a and seamless way of interacting and transacting customer/user), Anomaly Detection model for for customers. It will further enforce YES BANK’s POS terminals to ensure higher service levels endeavors to become a technology-led company in and a Recommender model for relationship the business of banking. managers to identify priority customers. ▲▲ API Banking: YES BANK has undertaken During FY 2018-19, several new initiatives were tremendous strides to ensure a stronger completed successfully, as well as systems were connect with its customers and ensure a upgraded to latest versions to support the growing seamless experience when transacting and/ needs of the Bank. The key Bank-wide projects or making basic enquiries. Currently, it has completed during FY 2018-19 were: more than 850 customers on API Banking and ▲▲ Right Sourcing Strategy: YES BANK has this continues to grow at a healthy pace. This successfully completed transitions of end user product offering is replicated across Enterprise support system, IT infrastructure management Technology Architecture and the ‘API first’ and business applications maintenance, among philosophy is being imbibed by the Bank’s others from total outsourcing arrangements to technology team. Right Sourcing operating model. This ensures ▲▲ Awards and accolades: YES BANK won retention of key technology talent and a multiple awards at the prestigious Indian more efficient use of partners. The model Banking Association Awards 2018-19. The Bank further entails the use of an optimal mix of was recognized with – Best use of customer- insourcing and outsourcing of staff to support centric technology solution – Winner and Best and maintain technology assets like business Technology Bank 2019– Runner Up, Best use applications and IT infrastructure. of Analytics for superior Customer experience ▲▲ YES RAPIDO: A truly modern, state-of-the-art, – Runner Up. lightweight workflow management solution (II) Proposed New Projects having a front-end using Progressive Web Apps has been implemented by the Bank. There is a healthy pipeline of exciting new initiatives, YES Rapido leverages the power of Cloud which will enable YES BANK to deliver world-class technologies like Kubernetes and micro digital-first customer service in both assisted and services to make it one of the most agile self-help mode. and resilient technologies. This digital fabric solution will form a critical part of furthering ▲▲ Retail Net-Banking Upgrade: A completely digital transformation objectives of the Bank. refreshed and revamped Retail Net-Banking platform is expected to be launched in ▲▲ YES Genie: YES Genie leverages the Bank’s FY 2019-20. It has been built using state-of- efforts to consolidate all its customer data the-art security framework and using concepts (transactions, interactions, behavioral of the Modern Technology architecture. attributes and so on) into the Big Data platform (Hadoop) as its Enterprise Datawarehouse ▲▲ Unified Cash Management and Corporate technology. It is built using Modern Application Net-Banking Solution: A robust Core System Architecture (the state-of-the-art Microservice is critical to deliver a superior experience to

Annual Report 2018-19 83 all corporate customers of the Bank. The new Some of the key highlights of the Bank’s Human Capital solution will enable a more seamless and practices are illustrated below: straight-through processed environment for customer transactions. This will also be scaled Executive Engagement up further to ensure it promptly address the 5 C’s Employee Engagement Model needs and expectations of customers and growing business volumes. ▲▲ Extend Cloud-based Use cases: YES BANK plans to use Cloud infrastructure extensively to e ensure that the power of FutureTech is being leveraged across all levels of the Bank. ▲▲ Apollo Program for OSD Technology Transformation: With a vision to position ae nne YES BANK as the most ‘Customer Centric’ B Bank in the services segment and focus on ae the end-to-end Operation Service Delivery (OSD) Technology Transformation with Digital Solutions, Apollo Program will review, re- imagine and/or re-engineer every Business Operations Process, keeping customer at aee mmniae the forefront with the objective to ensure Efficiency, Productivity, Risk Management, and Compliance. YES BANK follows the 5 C’s Engagement Model comprising Culture, Communication, Career, Connect, ▲▲ Rural Retail Banking: The Bank is building a and Care, to engage its growing workforce. The Bank comprehensive mobility platform to create a engages and develops Human Capital by disseminating paperless banking experience and become and reconnecting YES BANKers with the Bank’s core the preferred banker in rural and semi-urban values, by creating an intentional culture, encouraging geographies. open and honest communication, strengthening connect HUMAN CAPITAL MANAGEMENT with employees and community, supporting career development and showing their care as an organization. YES BANK pursued a strong employee value proposition of ‘Creating & Sharing Value’ driven by the ethos of Holistic well-being forms the cornerstone of YES BANK’s Professional Entrepreneurship; a talent philosophy employee engagement model, disseminated digitally of Owner-Partner-Manager and superior employee through targeted initiatives under each of the pillar. experience, designed to encourage and reinforce a strong culture promoting meritocracy, performance and YES Club prudent risk taking. With the objective of encouraging an atmosphere of fun, camaraderie, and to provide YES BANKers a platform The Bank’s Human Capital engagement practices are to showcase their talent and creativity, YES CLUB was targeted at enhancing the brand as a Preferred Employer launched across its hub branches. ‘YES CLUB’ facilitates of Choice among new-age knowledge human capital. participation in activities around three broad themes: It deploys a suite of best-in-class initiatives that deliver Social, Culture and Sports. Since its launch, YES BANKers fast-paced, high-quality and predictive human capital across the Bank’s 262 hub branches have organized outcomes leveraging technology-driven digital platforms. and participated in activities such as sports tournaments, adventure sports & trekking, arts and crafts exhibitions, The Bank made significant people investments in photography contests, blood donation camps, and FY 2018-19 by building Human Capital capacity, both in employee volunteering activities. terms of leadership capabilities and requisite skills through institutionalized initiatives. These initiatives encompass learning and development interventions, employee engagement driven through digital platforms and holistic well-being embodied through ‘YES Personality’.

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YES CLUB – Wellness YES Future Ready YES BANK recognizes employee well-being as the USRM also kicked off the 5th season of YES Future Ready foundation that will enable fostering of high-quality, scholarship program in January 2019. The program customer-centric, service-driven workforce committed identifies 30 student scholars from India’s premier to realizing its vision. Wellness forms a primary driver in B-schools and engineering institutes and awards them a the Bank’s endeavors of engaging with its executives; scholarship of `2 lakh for consistent academic excellence. while physical, emotional and nutritional well-being form It endeavors to make scholars ‘future skilled’ by making the cornerstone of its wellness agenda. Wellness at available resources and mentorship focused on new-age YES BANK is implemented through both physical and digital and technology focused aspects, beyond their digital channels using gamified solutions coupled with college curriculum. on-site fitness and health-related sessions. USRM has a keen focus on engaging and onboarding YES League of Excellence ‘early talent’ as a driver to propel YES BANK’s growth objectives. YES BANK launched its revamped rewards and recognition online portal called the ‘YES LEAGUE OF YES School of Banking (YSB) EXCELLENCE’ to provide a formal recognition platform to recognize and reward Excellence at the Bank. This will YES BANK has always strongly believed that knowledge simultaneously give rise to a ‘culture of appreciation’. is a key differentiator, and continues to invest in All YES BANKers have the option to appreciate and wish developing its Human Capital for creating differentiated their colleagues on achievements or occasions, while capacity, capability, and culture and confidence. reporting managers can nominate colleagues for rewards In line with this belief, the Bank institutionalized the such as Employee of the Month. YES School of Banking in 2007. The academy was established with a vision to create a Center of University & Schools Relationship Excellence for learning solutions in banking and Management (USRM) related areas, and drive alignment of business goals at every stage of the organization’s growth. University and Schools Relationship Management All learning and development initiatives at (USRM) is a structured, sustainable and scalable YES BANK are domiciled under the aegis of this dedicated engagement program, which has created and maintained knowledge function. mindshare for YES BANK and plays a pivotal role in building YES BANK’s brand as an ‘Employer of Choice’ The key focus areas for YSB are: among the best educational institutions in India and abroad. USRM was instrumental in hiring 29 students ▲▲ Future Now Programs to equip all relevant employees from the Top 20 B-schools of the country as a part of on ‘Emerging Concepts and Technologies’ in the the YES – Professional Entrepreneurship Program banking eco-system (Y-PEP) 2018-19. ▲▲ Certification of staff based on Capacity Building in Banks and All India Financial Institutions (AIFIs) and YES BANK Transformation Series IT and Cyber Security The USRM team launched the 7th edition of ▲▲ Leadership Development framework for all 'YES BANK Transformation Series', a case study management bands to ensure a culture of positive competition that endeavors to make India’s youth and impacting leadership aligned to business issues by instilling a problem finding and solution mindset. What began in 2010 as ▲▲ Training initiatives that are fully aligned to the a case study challenge for B-school students has been business, people and growth priorities of the Bank scaled exponentially to bringing global organizations, ▲▲ Productivity Enhancement government entities and students across India’s management and tech institutes to chart the roadmap to ▲▲ Cross-sell solve issues of national importance. Recently, the initiative ▲▲ Service Culture was also ranked as fourth most prestigious B-School competition of 2019 by Dare2compete (a leading platform ▲▲ Compliance and community for B-school news and competitions), ▲▲ Digitization based on student responses.

Annual Report 2018-19 85 Women Centric Initiatives roles across middle, senior and top management, resulting in an increase in representation of women executives in Say YES to G.R.A.C.E. key positions. YES BANK has revised the Policy for Prevention of Sexual Harassment in line with the ‘The Sexual Harassment Rewards and Recognition of Women at Workplace (Prevention, Prohibition and YES BANK was recognized as: Redressal)’ Act & Rules, 2013. ▲▲ Winner of ‘Golden Peacock National Training With a view to create a robust framework for dissemination, Awards’ 2018 (Private Banks) awareness creation, and periodic reiteration of Prevention ▲▲ The No.1 ‘Dream Company to Work For’ and ‘Best of Sexual Harassment policy among all executives, the Employer Brand’ by the World HRD Congress 2019 Bank launched ‘Say YES to G.R.A.C.E’, where G.R.A.C.E stands for Gender Respect and Commitment to Equality. ▲▲ Transformation Series 2018 award for the fourth This initiative is applicable to all YES BANKers irrespective Most Prestigious B-School Competitions in March of their gender. Keeping in mind the focus on women’s 2019 presented by Dare2Compete in association safety in India, this initiative has played a key role in with CNBC TV18 gender sensitization. ▲▲ Ranked fourteenth in LinkedIn list of ‘Top 25 Companies where Indians want to work’ for 2019 YES WE CARE: Celebrating ‘Special Moments’ YES BANK rolled out benefits for its employees, who RISK MANAGEMENT adopt children, in an effort to align organizational The long-term financial security and success of the objectives with the emerging needs of its employees. Bank is built on its robust risk management system. Recognizing that many new parents choose adoption Risk Management at YES BANK is based on three lines of and they need to spend time with the child to build an defense principles: Business units, Independent Control emotional connect, the Bank introduced the benefits, Functions, and Audit. Through proactive and improved applicable from August 1, 2016. risk management practices, the Bank’s risk management function continuously works toward achieving financial Under the new policy called ‘Bringing A Beautiful stability and enhancing stakeholder value. The Board of Yes’, rolled out under the ‘Yes We Care’ initiative, Directors of the Bank has the overall responsibility for employees adopting a child will be offered paid leaves. Risk Management. The Risk Management Architecture Female employees adopting a child of six years of age of the Bank is overseen by five Board-level Committees: or below can take up to two months of paid leave, and a a) Risk Monitoring Committee (RMC), b) Audit Committee month of paid leave for adopting a child over the age of (AC), c) Fraud Monitoring Committee (FMC), d) Board six years (up to 14 years). Committee on Wilful Defaulters & Non-Cooperative Borrowers (BCWD&NCB), and e) Board Credit Committee The Bank has also enhanced its existing paternity (BCC). The Board-level Committees strive to put in place leave policy to include seven days of leaves applicable specific policies, frameworks and systems for effectively even in the case of adoption. Mothers resuming work managing the Bank’s various risks. post adoption receive a monetary gift voucher to welcome them back. Risk Management Unit 24*7 Helpline Number The day-to-day functioning is managed by the Risk YES BANK has in place a 24/7 Helpline Number Management Unit (RM). The RM unit is headed by the for emergency situations available to all YES BANK Chief Risk Officer (CRO), who leads the Credit Risk employees. An employee just needs to dial or send an (Underwriting) unit, General Legal Counsel and other SMS to an emergency number to trigger an SOS call/SMS Risk units. The CRO reports to the MD & CEO. The CRO to the registered emergency contacts of the executive, is responsible for ensuring an effective implementation including the manager and HCM Relationship Manager. of an enterprise-wide risk management framework through various risk policies, processes, limits and Diversity Recruitment Drives – Increasing controls that enable prompt risk identification, accurate Women Workforce at YES BANK risk measurement and effective risk mitigation. The CRO is also responsible for risk compliance and monitoring, The Bank has focused recruitment drives and campus as well as reviewing and presenting various risk reports, placements targeting women employees for Branch policies and dashboards to RMC and the Board. Banking in metro locations. During the last financial year, the Bank increased its focus on gender mix in leadership

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The RM unit is designed to establish an effective, them. All corporate credit proposals are approved non-silo-based Enterprise Risk Management (ERM) either through a committee approach or through Joint framework to ensure sustainable business growth with Delegation, depending on rating and exposure thresholds stability. It is also focused on promoting a proactive outlined in the Credit Policy. The Bank currently has approach in identification, assessment, management and four committees for approving credits, including reporting of risks associated with the Bank’s business. Board Credit Committee (BCC), Management Credit The RM enables the Bank to successfully meet its business Committee (MCC), Executive Credit committee (ECC) and and financial goals, while maintaining effective Board and Retail & Business Banking Credit Committee (RBBCC). management oversight on risk and control parameters. Of these, the BCC is a Board-level sub-committee, while MCC, ECC and RBBCC comprise Top and Senior Enterprise Risk Management Management personnel. Joint Delegation involves two or three approvers jointly approving the proposal, YES BANK has an Enterprise Risk Management (ERM) which primarily addresses large volume of small ticket unit that is responsible for implementation of the ERM proposals. While exercising their sanctioning powers, framework, risk aggregation, and risk-based pricing. these designated committees/functionaries exercise the The ERM unit is also involved in risk assessment of Pillar II highest level of due diligence and ensure adherence to risks, viz. Reputation Risk, Compliance Risk, Concentration the Bank’s Credit Policy and other regulatory guidelines. Risk and so on. Basel II/III compliance, Internal Capital Adequacy Assessment Process (ICAAP), and bank-wide The appraisal process encompasses a detailed risk stress testing. assessment and rating of obligors, using the Bank’s rating models. These models have been developed in The Bank has two Committees: Enterprise Risk conjunction with a reputed external credit rating agency Management and Capital Management Committee and cover all corporate business segments of the Bank. (ERCC) and Reputation Risk Management Committee The ratings of customers are assessed based on their (RRMC). ERCC is responsible for overseeing ERM and financial performance, industry characteristics, business Capital Management, while ensuring that all material risks positioning, project risks, operating performance and are identified, measured, monitored and controlled in other non-financial parameters such as quality of accordance with the Bank’s risk appetite, as well as within management and conduct of account. regulatory guidelines. The RRMC oversees the reputation risk profile, designs proactive steps for enhancement of The Bank additionally has in place scorecards for specific reputation of the Bank and management of reputation risk schematic programs in case of Retail and SME borrowers. events for the Bank. This function works in close coordination with various business segments to periodically review the individual The Bank has successfully migrated to Basel II capital borrower relationships and assesses the overall health adequacy norms since March 31, 2009. Under this, it has of borrowers. The Bank has taken proactive measures adopted the ‘Standardized Approach’ for measurement to ensure that delinquencies keep to a minimum level of Credit Risk, ‘Basic Indicator Approach’ for Operational through robust post-sanction monitoring processes. Risk and ‘The Standardized Duration Approach’ for Market There is a dedicated team which works toward ensuring Risk. The Bank has also implemented the Basel-III norms, compliance to the sanctioned terms and conditions and has laid down a roadmap for migration to advanced through an internal tracking system. approaches for capital charge computation, across Credit Risk, Market Risk and Operational Risk. The Bank has There is also an independent ‘Portfolio Analytics Unit’, formulated an overarching ERM Policy and an extensive which is responsible for monitoring the entire credit policy on ICAAP commensurate with the Bank’s size, portfolio across all segments, including identifying level of complexity, risk profile and scope of operations. portfolio trends and generating portfolio-level MIS The Bank has thus evolved a robust enterprise-wide risk covering various credit quality indicators. Further, the management framework, which is geared to support the ‘Credit Risk Policy Unit’ is responsible for independently strategic objectives and business plans of the Bank. reviewing the Bank’s credit policies and programs, including validation and monitoring of rating models. Credit Risk The Unit is also responsible for migration to Internal Ratings Based (IRB) approach and IndAS for Credit Risk. YES BANK’s Credit Risk management is governed by The Bank has an active legal department that helps in a comprehensive and well-defined Board-approved assessing and managing Legal Risk. The department has Credit Policy. It encompasses credit approval processes developed a comprehensive set of standard documents for all business segments, along with the guidelines for various types of credit products and is responsible for monitoring and mitigating the risks associated with for ensuring legal compliance of applicable laws and

Annual Report 2018-19 87 ensuring that the documentation entered into by the business units, understand future changes and threats, Bank is legally valid and enforceable. and concur on areas of highest priority and related mitigation strategy. Market Risk The Bank has also constituted a Product and Process YES BANK’s Market Risk management is governed Approval Committee (PPAC) for approval and risk by comprehensive Board-approved policies such as evaluation of all new products/modifications to existing Market Risk Policy, Asset Liability Management Policy, products for the Bank. The Bank has further implemented Investment Policy, Hedging Policy, Stress Testing Policy, a Business Continuity Management Committee (BCMC) as Derivative Policy, Derivative Appropriateness Policy and a sub-committee of ORMC, responsible for development, Liquidity & Contingency Funding Policy, to ensure that implementation and ongoing monitoring and review of risks underwritten across business activities are within the effectiveness of the Business Continuity Plans (BCP) the stipulated risk appetite of the Bank, and also to across the Bank. ensure that similar risks are aggregated. These policies have been benchmarked with industry best-practices and Additionally, the Bank has also constituted Outsourcing RBI regulations. Management Committee (OMC) to review the effectiveness of the outsourcing policy and procedures The Bank has an integrated, straight-through processing and to ensure effective due diligence and monitoring of and state-of-the-art treasury system for enabling better risk the Bank’s outsourced activities on a continuous basis. management. The Bank measures liquidity, currency, and interest rate risks through various metrics, encompassing Climate Risk Liquidity Monitoring, Liquidity Gap Analysis, Liquidity Coverage Ratio, along with other Liquidity Ratios, Value YES BANK recognizes climate risk and refers to the at Risk (VaR), Earnings at Risk (EaR) and Market Value of Financial Stability Board’s Taskforce on Climate-related Equity, among others, based on regulatory guidelines or Disclosures (TCFD) recommendations to address it. In the using robust internal risk models. The Bank also regularly last financial year, the Bank’s management committees conducts stress testing to monitor the Bank’s vulnerability consider climate risk in their briefing and the Bank’s towards extreme but plausible unfavorable shocks. Internal Capital Adequacy Assessment Process details The Bank monitors and controls its risks using various its importance within the framework, alongside other internal and regulatory risk limits for trading book and Pillar – II risks. banking book, which are set according to a number of criteria, including economic scenario, business strategy, YES BANK broadly categorizes climate risks into physical peer analysis and the Bank’s risk appetite. The risk and transitional risks. Physical risks are a consequence of reporting mechanism in the Bank comprises disclosures direct physical impacts of climate change and range from and reporting to the various management committees, acute risks (such as extreme weather events) to chronic including Investment and Financial Markets Management risks (like gradual rise in sea level and temperature). Committee and Asset Liability Committee, among others. Due to these acute and chronic changes in climate, the Bank faces risk to its physical assets, which could result Operational Risk in service disruption. The Bank remains ISO 22301 certified, an International Business Continuity Standard, Operational Risk is the risk of loss resulting from to effectively address these possible service disruptions. inadequate or failed internal processes, people or systems, This certified and robust business continuity plan helps or from external events. Operational Risk includes legal manage any potential service disruption at all its locations. risk but excludes strategic and reputational risks. It is inherent in the Bank’s day-to-day business activities. Transition Risks arise from external efforts to address climate change, including but not limited to regulatory The Bank has implemented a robust and comprehensive and policy changes, technological advancement or Operational Risk Framework defined as part of the shifts in investor sentiment and consumer behavior. Board-approved Operational Risk Management Policy Globally, there are many countries adopting climate to identify, assess and monitor risks, strengthen controls related regulation. India is also expected to bring in more and minimize Operational Risk losses. The Bank has stringent regulations, which may negatively affect the constituted the Operational Risk Management Committee Bank’s assets. The Bank remains future focused and is (ORMC), consisting of Senior Management of the Bank for addressing this eventuality by educating its employees implementation and monitoring of the Operational Risk on climate risks and mitigation strategies through Framework throughout the Bank. The Committee is also climate-related sector briefs. responsible for reviewing Operational Risk profiles of the

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The Bank is aiming to address such technology to ensure that security issues, if any, are proactively transition risk by bridging the innovation gap in the identified and remedied. To monitor Cyber Risks, the Bank industry. YES BANK is identifying and supporting the has a Security Operations Center (SOC), which keeps vigil next generation of climate-related technologies through on actionable threat intelligence, suspicious network its multi-track accelerator program, YES SCALE, for traffic and events to timely detect any anomalies and help startups. The accelerator focuses on scaling innovations respond to potential incidents. Further, the Bank keeps for Smart Cities, Cleantech, Agri-tech, Life Sciences and the employees, customers, and other stakeholders aware Education. Through this accelerator, the Bank is engaging of the global cyber threat landscape and risks applicable, with innovative models that are leveraging new-age to protect them from becoming victims of cyber-attacks. technologies. The startups are addressing climate-related challenges affecting business across water, energy, INTERNAL AUDIT waste, food tech, supply chain tech, farm tech, smart mobility, smart utility, data and governance. The program The Internal Audit Department (IAD) provides connects startups and their solutions to industry leaders; independent, objective assurance and consulting experts; corporates; government bodies; investors and services designed to add value and improve the Bank’s so on, while also strengthening the Bank’s strategy to risk and control environment. The IAD aids the Bank’s technological advancements. Management through its assessments to monitor adequacy, effectiveness, and adherence to internal The Bank has started aligning its annual disclosures controls, processes and procedures instituted by the to the Financial Stability Board endorsed TCFD Management and the extant regulations. recommendations last year. This is helping the Bank gather and analyse its lending activity to climate-related IAD reports to the Audit Committee of the Board (ACB) for sectors, and disclose financed emissions of some audit planning, reporting and review and to the Managing carbon-intensive sectors in a phase-wise manner. Director & CEO for day-to-day activities. The Bank has initiated these efforts to pre-empt investor and stakeholder demand for climate-related disclosures. The IAD is staffed with professionally qualified team members with additional relevant certifications. Through an Cyber Risk effective training program, the IAD ensures that all the team members are up-skilled at frequent intervals. In the last few years, the financial sector has witnessed significant investments in digitization and adoption of the The function has adopted a risk-based approach of same. This has led to the implementation of cutting-edge Internal Audit structured by taking into account the RBI technologies in the segment that enable prompt services guidelines and internationally established best practices. to customers. However, with the rise in digitization, A Risk Based Audit Plan (RBAP) is prepared annually security risks have emerged, which could occur due to and is duly approved by the ACB. The ACB monitors the the breach of confidentiality, integrity and availability progress of the RBAP, at least quarterly. The IAD prepares of classified data as a result of external or internal a report for each audit and recommends mitigation plans cyber-attacks. YES BANK has an Information Security Unit for the risks identified and ensures compliance with all the under the Risk Management Unit, to keep a check on the recommendations. applicable Cyber Risks. Additionally, the Bank also subjects its operations to The Bank has a governance structure in place for Concurrent Audit by reputed audit firms to complement effective security management. The Security Council has its Internal Audit function. The Concurrent Audit covers been constituted with cross-functional representation core activities such as the Operations, Financial Markets, at leadership level, which meets at quarterly intervals Data Center and Branches in compliance to the regulatory to review the implementation of Information Security guidelines. All audit reports are circulated to the relevant management system in the Bank. The Bank has management teams and the Audit Committee of the Board. implemented Board-approved Information Security Policy and Cyber Security policy, as directives to protect the The Bank’s Internal Audit department is ISO 9001:2015 information assets of the Bank. The security practices in certified (Quality Management System). the Bank are ISO 27001:2013 certified. COMPLIANCE The Bank has implemented a multi-layered security defense to protect against Cyber Risks. The Bank Ensuring compliance with regulatory requirements and periodically conducts security testing of all applications building trust among all its stakeholders is an overarching (old and new) and IT infrastructure and technologies consideration at YES BANK. The dedicated Compliance Department strives to be at the forefront of regulatory

Annual Report 2018-19 89 changes and continues to work closely with all businesses ▲▲ Setup dedicated Hedging Desk and operations at the Bank, to ensure compliance with all ▲▲ Strengthened Research credentials and expanded existing and new requirements. The key functions of this coverage universe (fundamental, thematic, technical) department include identifying effective procedures and corresponding controls to support the Bank’s business In FY 2018-19, YSIL took significant strides in divisions as well as dissemination of key regulatory achieving the long-term vision of establishing itself as a updates affecting the various businesses of the Bank. research-backed and client-centric multi-asset wealth The department also reviews new products and processes solutions provider. YSIL has set up a strong product team from a regulatory compliance perspective, providing with expertise across asset classes – Equity, Derivatives, guidance on compliance-related matters, conducting Debt, Advisory/Fund Management, Commodities, compliance reviews and imparting training to employees Currency, as well as a dedicated team focusing on on compliance aspects, among others. The Bank has also developing digital products. During the year, YSIL also put in place a ‘Know Your Customer’ and ‘Anti-Money significantly strengthened its research credentials Laundering Policy’ approved by the Board of Directors, and expanded its research coverage universe across and transaction monitoring procedures, as per the fundamental, thematic and technical insights. Some key regulatory guidelines. developments in YSIL:

YES BANK SUBSIDIARIES 1. Broking: Launch of Margin Trading Facility (MTF), an YES SECURITIES (India) Limited (YSIL) exchange-approved product, which offers leverage to clients to maximize their profit potential YES SECURITIES (India) Limited or YSIL, the Bank’s 2. Portfolio Investment Advisory: In FY 2018-19, YSIL wholly-owned capital markets intermediary, completed offered the following advisory strategies: five years of operations in FY 2018-19. YSIL, today, offers retail, HNI and corporate customers a comprehensive ▲▲ Nifty+ (Moderate to Low Risk): Selectively range of products and services, encompassing Investment investing in stocks/sectors belonging to Banking (including a dedicated Sustainable Investment Nifty50 index with an objective to generate Banking practice), Merchant Banking, Wealth Broking, higher alpha for investors Advisory, Research and Institutional Equities services. ▲▲ Wealth Enhancer (Low to Moderate Risk): Aimed at minimizing risk while generating YSIL is a SEBI* registered Stock Broker holding regular income by investing across equity and membership of National Stock Exchange (NSE), Bombay debt instruments Stock Exchange (BSE) and (MCX). YSIL is also a SEBI-registered Category I Merchant ▲▲ PIA Multiplier (High Risk): Leverage product Banker, Investment Adviser and Research Analyst. aimed at creating higher alpha through a

*Securities and Exchange Board of India structured model portfolio Investor Education Initiative(s) Wealth Broking YES MasterClass: Multi-city events were organized In FY 2018-19, YSIL’s Wealth Broking business continued to deliver investor education and investment-related to enhance its product and service proposition to insights to existing and potential YSIL customers. offer customers a more comprehensive investment Subject-matter experts from reputed financial services management experience. YSIL offers a best-in-class institutions addressed the audience with the sole 3-in-1 proposition in major cities across India. Its online purpose of empowering them to make more informed trading platform (available on web and mobile app) investment decisions. witnessed consistent growth in client transaction volumes further complementing the growing engagement between In FY 2018-19, YES MasterClass travelled to 6+ high net-worth clients and the dedicated dealing desk. cities and conducted 20+ Branch and large format MasterClass events addressing over 500 financial Key highlights of FY 2018-19: enthusiasts and investors. ▲▲ 162% y-o-y growth in Broking & Delayed Payment Investment Banking Charges (DPC) income The Investment Banking team provides Mergers and ▲▲ 268% y-o-y growth in Portfolio Investment Advisory Acquisition (M&A) and Capital Advisory services to large (PIA) Asset Under Advisory (AUA) and mid-market corporate and financial sponsor clients ▲▲ Launch of dedicated Currency Desk

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through key products such as Mergers & Acquisition ▲▲ Exclusive advisor to Pan India Food Solutions Advisory and private equity/structured debt fund raising. (Everstone investee company) for sale of business to a leading packaged foods company YSIL’s highly-experienced teams offer expertise across a ▲▲ Exclusive buy side advisor to Nayati Healthcare variety of sectors including Food and Agribusiness; Media Group for its acquisition of OSL Healthcare (600- and Entertainment; Consumer Markets; Infrastructure bed under-construction hospital in Gurugram and and Engineering, Procurement and Construction (EPC), 75-bed operational hospital in South Delhi) and SLJ Banking, Financial Services and Insurance (BFSI), Hospital (200-bed hospital in North Delhi) Internet & E-commerce, Industrials and Logistics to corporate clients. ▲▲ Strategic advisor to Hansa Vision

YSIL’s Investment Banking closed 11 transactions during Merchant Banking the year under review that include: YSIL's Merchant Banking practice has a strong focus on capital market activities offering a comprehensive ▲▲ Exclusive strategic & financial advisor to Kiran bouquet of products including Initial Public Offerings Energy for sale of 85 MW solar assets to Hinduja (IPO), Qualified Institutional Placements (QIP), Rights Group Issues, Open Offer, Buyback, Delisting and other ▲▲ Exclusive strategic & financial advisor to SREI for advisory services. sale of 60 MW wind assets to Renew Power During FY 2018-19, the highly-experienced team ▲▲ Exclusive advisor for sale of Nitesh Hub Mall, Pune successfully engaged with leading Indian companies as to ABIL Group a fund-raising partner and trusted advisor for their capital ▲▲ Exclusive advisor for sale of Charosa Wineries market requirements. The team completed 11 marquee Limited to Quintile Assets Limited and Grover transactions in FY 2018-19 as below: Zampa Vineyards Limited ▲▲ Left Lead Book Running Lead Manager to the `4.8 ▲▲ Exclusive strategic & financial advisor for sale of billion IPO of Rail Vikas Nigam Limited India Property Online Private Limited to Quikr ▲▲ Book Running Lead Manager to the `3.5 billion IPO ▲▲ Exclusive advisor to mValu Technologies (FinTech of Garden Reach Shipbuilders & Engineers arm of InCred Financial) for Series A raise from ▲▲ Manager to the `37.0 billion Open Offer of Dish TV – Elevar Equity one of the largest open offers in FY 2018-19 ▲▲ Exclusive advisor to Seed Works for sale of cotton ▲▲ Manager to the `4.0 billion Open Offer of Olectra seed business to a leading buyout fund Greentech ▲▲ Exclusive advisor to Carnival Films for acquisition of ▲▲ Sole Banker to the `5.5 billion by multiplex screens of E-Square Hatsun Agro Product ▲▲ Advisor to TATA Power for Scheme of Arrangement

Wealth Broking & involving sale of non-core defense division Investment Advisory ▲▲ Advisor to Arvind Limited for Scheme of Arrangement involving demerger of engineering & branded apparel businesses ▲▲ Lead Manager to the Public Issue of NCDs of Sustainable vv Institutional `110.0 billion by Dewan Housing Finance Investment YES Research Banking VSecuritiesALUES & Sales ▲▲ Lead Manager to the Public Issue of NCDs of `20.0 billion by Indiabulls Commercial Credit ▲▲ Left Lead Manager to the Public Issue of NCDs of Merchant Investment `6.8 billion by Aadhar Housing Finance Banking Banking ▲▲ Lead Manager to the Public Issue of NCDs of `21.5 billion by Mahindra & Mahindra Financial Services

Annual Report 2018-19 91 Institutional Sales & Trading April 21, 2017 and was granted approval by Securities and Exchange Board of India (SEBI) on July 3, 2018 to act FY 2018-19 was a significant year as institutional as an Asset Management Company/Investment Manager brokerage rose 73% over FY 2017-18. The team to YES Mutual Fund. successfully secured empanelment as broker across major Asset Management and Insurance companies. YAMIL driven by the motto ‘Experience our Expertise’, Besides, backed by improved client service, execution seeks to build a strong mutual fund franchise to provide excellence and superior research, the team succeeded in a complete suite of financial products for all its investors. reactivating transaction activity from valued institutional The Board and the team at YES Asset Management clients. YSIL has proactively engaged and ideated with comprises seasoned professionals with rich experience clients’ on capital market insights, corporate road shows in financial services and mutual funds. and regular research inputs. YAMIL pursues to combine its investors’ and stakeholders’ As on March 31, 2019, YSIL is empaneled with interests and bring out optimum solutions for its investors. 31 institutions of which four were added in FY 2018-19. Toward the same, it has currently focused on providing liquidity management solutions to corporates, HNIs Equity Research and retail investors and has received SEBI's approval to YSIL’s Research team was significantly strengthened in launch three Mutual Fund's (Liquid, Overnight and Ultra FY 2018-19. The highly-rated and award-winning team of Short-Term Fund). Research Analysts has rich industry experience in serving diverse client segments and bring knowledge expertise Looking at the tightening liquidity scenario, YAMIL across diverse industry sectors and asset classes. launched its first New Fund Offer of YES Liquid Fund in January 2019 to cater to the liquidity management The research coverage universe has expanded to 175 requirements of its corporate/HNI relationships. companies, accounting for more than 50% of India’s In FY 2019-20, it expects to launch funds in equity and listed market capitalization. The team is well-recognized debt categories to offer wide ranging product suite to its for its ability to spot multi-baggers, contra-to-market investors in retail and institutional categories. ideas in large caps and deep corporate relationships. Besides fundamental capabilities, YSIL’s analysts also YES Trustee Limited have proven expertise in technical and derivative analysis. YES Trustee Limited (YTL) was incorporated on YES Asset Management (India) Limited May 3, 2017 as a wholly owned subsidiary of YES BANK Limited (YBL). YTL is acting as a Trustee Company to YES Asset Management (India) Limited (YAMIL), a wholly YES Mutual Fund (YMF). It will provide trusteeship services owned subsidiary of YES BANK was incorporated on to all the funds launched by YMF.

OVERVIEW OF FINANCIAL PERFORMANCE Key Ratios: ` in millions Particulars FY 2018-19 FY 2017-18 Return on average equity (%) 6.5% 17.7% Return on average assets (%) 0.5% 1.6% EPS - Basic (`) (not annualized) (FV `2) 7.45 18.43 Book value per share (`) (FV `2) 116.2 111.8 Cost to income 43.5% 40.2% Cost of fund 6.5% 6.0% Capital Adequacy Ratio Basel III 16.5% 18.4% Tier I 11.3% 13.2% Tier II 5.2% 5.2% Gross non-performing advances (NPA) % to Total Advances 3.22% 1.28% Net NPA % to Total Advances 1.86% 0.64% CASA ratio to % of total deposits 33.1% 36.5% *As per Basel III, including profit, excluding proposed dividend.

92 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

The Bank has CASA ratio of 33.1%. The Bank shareholder returns with basic and diluted EPS `7.45 and `7.41 respectively, taking the book value up to `116.2.

Operating performance

` in millions Particulars FY 2018-19 FY 2017-18 % change Interest income 296,247.47 202,674.22 46.2% Interest expense 198,157.16 125,303.62 58.1% Net-Interest Income 98,090.31 77,370.59 26.8% Non-interest Income 45,901.53 52,238.34 -12.1% Operating revenue 143,991.84 129,608.93 11.1% Operating expenses 62,642.77 52,127.80 20.2% Operating profit 81,349.07 77,481.13 5.0% Provisions and contingencies 57,775.60 15,538.04 271.8% Profit before tax 23,573.47 61,943.09 -61.9% Provision for tax 6,370.68 19,697.46 -67.7% Net profit 17,202.79 42,245.64 -59.3%

Net profit for FY 2018-19 decreased by 59.3% to` 17,202.79 million as compared to `42,245.64 million for the FY 2017-18. Net Interest income (NII) of the Bank increased by 26.8% to `98,090.31 million during FY 2018-19 as compared to `77,370.59 million during FY 2017-18. The Net Interest Margin (NIM) was 3.2% in FY 2018-19. Non interest income consists of fee, trade income and gain on sale of securities. Non interest income decreased by 12.1% from `52,238.34 million in FY 2017-18 to `45,901.53 million in FY 2018-19.

Operating expenses increased by 20.2% from `52,127.80 million in FY 2017-18 to `62,642.77 million in FY 2018-19. Key drivers of operating expense growth were growing branch network of the bank and scaling up of retail asset and credit card business of the bank.

Provisions and contingencies (excluding provision for taxes) increased by `42,237.56 from `15,538.04 million in FY 2017-18 to `57,775.60 million in FY 2018-19.

Net interest income The following table sets forth, for the periods indicated, the net interest income and spread analysis: ` In million Particulars FY 2018-19 FY 2017-18 % change Interest income 296,247.47 202,674.22 46.2% Interest expense 198,157.16 125,303.62 58.1% Net Interest Income 98,090.31 77,370.59 26.8% Net interest margin 3.2% 3.5% -

Net Interest income (NII) of the Bank increased by `20,719.72 (26.8%) to `98,090.31 FY19 million during FY 2018-19 as compared to `77,370.59 FY18 million during FY 2017-18. Increase in NII is on the back of improvement in loan book & investment of the bank.

Annual Report 2018-19 93 Non-Interest income:

` In million Particulars FY 2018-19 FY 2017-18 % change Commission, exchange and brokerage 36,361.45 41,379.64 (12.1%) Profit on the sale of investments (net) 3,174.84 5,134.74 (38.2%) Profit/(Loss) on sale of land, building and other 3.95 (12.89) (130.6%) assets Profit on exchange transactions (net) 1,570.30 2,315.71 (32.2%) Miscellaneous income 4,790.99 3,421.14 40.0% 45,901.53 52,238.34 (12.1%)

Non-interest income consist of commission and fee income, trade income, derivative and foreign exchange income, gain on sale of securities and other income. Non-interest income of the Bank decreased by 12.1% to `45,901.53 million during FY 2018-19 as compared to `52,238.34 million during FY 2017-18. Decrease in non-interest income is primarily due to decrease in commission and fees income and lower gain on revaluation / sale of investments.

Operating expenses / Non-interest expenses The following table sets forth, for the periods indicated, the principal components of Operating expenses:

` in million Particulars FY 2018-19 FY 2017-18 % change Payments to and provisions for employees 24,697.65 21,889.20 12.8% Depreciation on own property (including 3,015.42 2,309.70 30.6% non‑banking assets) Other administrative expenses 34,929.70 27,928.90 25.1% Operating expenses 62,642.77 52,127.80 20.2% Cost to income ratio 43.5% 40.2% -

Non-interest expenses primarily include employee expenses, depreciation on assets and other administrative expenses. Non-interest expenses increased by 20.2% from `52,127.80 million in FY 2017-18 to `62,642.77 million in FY 2018-19.

The Bank continued to make substantial investments in information technology and branch expansion to meet its growth targets. Operating expenses increased by 20.2% from `52,127.80 million in FY 2017-18 to `62,642.77 million in FY 2018-19. Employee costs is increased by 12.8% from `21,889.20 million in FY 2017-18 to `24,697.65 million in FY 2018-19. Also the number of employee has increased from 18,238 at March 31, 2018 to 21,136 at March 31, 2019. Employee costs accounted for 39.4% of our operating expenses for the FY 2018-19 compared to 42.0% for the FY 2017-18. Other administrative expenses also increased by 25.1% to `34,929.70 million in FY 2018-19 on account of the branch expansion to 1,120 as on March 31, 2019 from 1,100 as on March 31, 2018. The bank also scaled up investments in information technology, retail asset and credit card business which contributed to increase in operating expenses. Despite increasing investments in information technology and branches, the Bank maintained a satisfactory cost to income ratio of 43.5% for the FY 2018-19.

Provisions and contingencies (including provision for tax) Provisions and contingencies increased by 82.1% from `35,235.49 million to `64,146.28 million. The key components of provisions are Provisions for NPAs of `25,669.54 million (FY 2017-18: `10,788.29 million), provision for taxation of `6,370.68 million (FY 2017-18 `19,697.46 million), and Provision for Standard Assets `22,514.06 million (FY 2017-18: `1,687.43 million) and Provision on investments of `6,824.89 million (FY 2017-18: `2,599.44 million).

94 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

FINANCIAL CONDITION Assets

` in millions Particulars At March 31, 2019 At March 31, 2018 % change Assets Cash and bank balances 268,895.12 247,343.66 8.7% Cash and balances with RBI 107,977.37 114,257.49 -5.5% Balances with banks and money at call and short 160,917.75 133,086.18 20.9% notice Investments 895,220.33 683,989.39 30.9% SLR investments* 553,611.12 488,860.83 13.2% Non-SLR investments* 341,609.21 195,128.56 75.1% Advances 2,414,996.02 2,035,338.63 18.7% In India 2,226,297.76 1,891,273.01 17.7% Outside India 188,698.27 144,065.62 31.0% Fixed assets 8,169.96 8,323.92 -1.8% Other assets 220,980.23 149,460.44 47.9% Total 3,808,261.65 3,124,456.03 21.9%

* Includes investment in government securities, Banks in India are required to maintain a specified percentage, currently 19.00%, of their net demand and time liabilities by way of liquid assets like cash, gold or approved unencumbered securities.

Total assets of the Bank increased by 21.9% `488,860.83 at March 31, 2018 to `553,611.12 at from `3,124,456.03 million at March 31, 2018 to March 31, 2019. `3,808,261.65 million at March 31, 2019, primarily due to 18.7% increase in loan book and 30.9% increase in Advances investment of the bank. During FY 2018-19 the Bank recorded a growth of CASH AND CASH EQUIVALENTS 18.7% in its loan book with advances increasing to `2,414,996.02 million, primarily due to increase in term Cash and cash equivalents include cash in hand and loan of the bank. Corporate Banking accounted for 65.6% balances with RBI and other banks, including money of the Advances portfolio, while Retail & Business Banking at call and short notice. Cash and cash equivalents (incl. MSME) constituted 34.4%. increased from `247,343.66 million at March 31, 2018 to `268,895.12 million at March 31, 2019 primarily due Net advances of IFSC Banking Unit (IBU) in GIFT City to an increase in balances with banks and money at call increased from `144,065.62 million at March 31, 2018 to and short notice. `188,698.27 million at March 31, 2019.

Investments Fixed assets and other assets Total investments increased by 30.9% from `683,989.39 Fixed assets (net block) decreased by 1.8% from million at March 31, 2018 to `895,220.33 million at `8,323.92 million at March 31, 2018 to `8,169.96 million March 31, 2019 primarily due to an increase in investments at March 31, 2019. Other assets increased by 47.9% from in government securities by `64,750.29 million from `149,460.44 million at March 31, 2018 to `220,980.23 million at March 31, 2019.

Annual Report 2018-19 95 FINANCIAL CONDITION Liabilities

` in million Particulars At March 31, 2019 At March 31, 2018 % change Liabilities Capital 4,630.07 4,605.93 0.5% Reserves and Surplus 264,411.90 252,976.86 4.5% Deposits 2,276,101.82 2,007,381.48 13.4% Current deposit accounts 285,420.87 288,257.25 -1.0% Saving Account 467,112.35 443,504.51 5.3% CASA 752,533.22 731,761.76 2.8% Term Deposit 1,523,568.60 1,275,619.72 19.4% Borrowings 1,084,241.09 748,935.81 44.8% Borrowing in India 673,595.98 461,878.31 45.8% Borrowings outside India 410,645.11 287,057.50 43.1% Other liabilities and provisions 178,876.79 110,555.95 61.8% Total 3,808,261.65 3,124,456.03 21.9%

Equity Capital and Reserve and surplus constituted 67.7% of the funding (i.e., deposits and borrowings). The Bank’s CD ratio stood at 106.1% as at Share capital of the bank increased from `4,605.93 million March 31, 2019. as at March 31, 2018 to `4,630.07 million as at March 31, 2019. During the financial year ended March 31, 2019, the Bank has issued `12,065,794 shares pursuant to the Borrowings exercise of employee stock options (ESOPs). Borrowings increased by 44.8% from `748,935.81 million at March 31, 2018 to `1,084,241.09 million at Reserves and Surplus increased from `252,976.86 March 31, 2019. The increase in borrowing is primarily million as at March 31, 2018 to `264,411.90 million as due to refinance and IBU borrowing. During the year the at March 31, 2019. Increase in Reserve and Surplus is Bank has raised Non-convertible Redeemable Unsecured primarily due to accretion of profits and increase in Share Basel III compliant Tier II Bonds of `30,420 million. Premium account.

Deposits Other liabilities Other liabilities increased by 61.8% from `110,555.95 Deposits increased by 13.4% from `2,007,381.48 million at March 31, 2018 to `178,876.79 million at million at March 31, 2018 to `2,276,101.82 million at March 31, 2019. March 31, 2019. Term deposits increased by 19.4% from `1,275,619.72 million at March 31, 2018 to `1,523,568.60 million at March 31, 2019, while savings Regulatory capital account deposits increased by 5.3% from `443,504.51 In line with the RBI circular on Basel III Capital Regulations, million at March 31, 2018 to `467,112.35 million at currently for computing capital requirement, YES BANK March 31, 2019 and current account deposits decreased has adopted the standardized approach for credit risk, by 1.0% from `288,257.25 million at March 31, 2018 standardized duration approach for market risk and Basic to `285,420.87 million at March 31, 2019. The Bank indicator approach for operational risk. The Bank has also has seen an increase in the composition of granular put in place a Board approved policy on Internal Capital deposits on account of an increasing branch franchise Adequacy Assessment Process (ICAAP) which defines and customer base of the Bank. The current and savings and sets processes to review and improve the techniques account (CASA) deposits increased from `731,761.76 used for identification, measurement and assessment of million at March 31, 2018 to `752,533.22 million at all material risks and resultant capital requirements. March 31, 2019. Total deposits at March 31, 2019

96 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

Capital Adequacy Ratios At March 31, 2019 At March 31, 2018 Total capital ratio (CAR) out of the above 16.5% 18.4% - CET1 8.4% 9.7% - Tier I Capital 11.3% 13.2% - Tier II Capital 5.2% 5.2%

As per Basel III norms, YES BANK had a capital adequacy has been decided to defer the implementation of Ind AS ratio of 16.5% as at the end of March 31, 2019. As per till further notice. Basel-III, Tier I capital ratio was 11.3% and the Tier II capital ratio was 5.2% as at March 31, 2019. During the year the As per RBI directions, YES BANK has taken Bank has raised Non-convertible Redeemable Unsecured following steps so far: Basel III compliant Tier II Bonds of `30,420 million. ▲▲ YES BANK is submitting quarterly Proforma Ind AS financial statements to the RBI Subsidiary Performance ▲▲ Formed Steering Committee for Ind AS YES BANK has three subsidiaries implementation. The Steering Committee comprises Chief Financial Officer (CFO) (Chairman), Chief Risk Yes Securities (India) Limited (YSIL), YES Asset Officer (CRO), Chief Operating Officer (COO), Chief Management (India) Limited (YAMIL) and YES Trustee Information Officer (CIO) and members of the Senior Limited (YTL). All the three subsidiaries are wholly owned Management from Financial Management, Risk subsidiaries of the bank. YSIL is the Bank’s Broking and Control and Treasury Operations. The Committee Investment Banking subsidiary. During the year, the Bank oversees the progress of Ind AS implementation has infused capital of `990 million in YSIL (including 690 in the Bank, and provides guidance on critical million on account of share premium). The Bank has also aspects of the implementation such as Ind AS infused capital of `195 million in YAMC. YTL's principal technical requirements, systems and processes, activity is to act as trustee for funds (Yes Mutual Fund). business impact, people and project management. YAMC has entered into investment management The Committee closely reviews progress of the agreement with YTL to act as the investment manager for implementation. any funds to be launched by Yes Mutual fund. ▲▲ Steering committee updates the Audit Committee and the Board on preparedness for migration to Ind During FY 2018-19 YSIL reported a profit of `51.99 AS on a quarterly basis. million vis a vis a profit in FY 2017-18 of` 133.01 million. Total revenue from operations of YSIL increased ▲▲ Further, YES BANK has procured IT solutions to by 25.08% from 718.58 million during FY 2017-18 to automate Expected Credit Losses (ECL) computation 898.80 million in FY 2018-19. and other accounting changes required in Ind AS in order to improve the robustness of the process. Further, YAMC has made the loss of `161.00 million with YES BANK will continue to liaise with RBI and industry total income of `38.60 million with and YTL has made bodies on various aspects pertaining to Ind AS loss of `1.11 million with total revenue from operations implementation. of `0.50 million.

Update on Ind AS implementation: SWOT ANALYSIS Strengths The Institute of Chartered Accountants of India has issued Ind AS (a revised set of accounting standards) The Fourth largest private sector bank of India today, which largely converges the Indian accounting standards YES BANK has demonstrated consistent performance with International Financial Reporting Standards (IFRS). since its inception in 2004 and continues to create value The Ministry of Corporate Affairs (MCA) has notified for its stakeholders. these accounting standards (Ind AS) for adoption. The RBI through press release RBI/2018-2019/146 Over the past three years, the Bank has grown its Total DBR.BP.BC.No.29/21.07.001/2018-19 March 22, 2019 Assets at a CAGR of 32.1%, granular CASA Deposits by updated all scheduled commercial banks that legislative 33.9% and Net Interest Income by 29.0%. amendments recommended by the RBI are under consideration of the Government of India. Accordingly, RBI

Annual Report 2018-19 97 The Bank has a strong and experienced leadership, (subject to Shareholder’s approval) for a potential equity competitive product offerings, and technology-driven fundraise of up to $1 billion in the Board Meeting held on operations and services across Corporate, MSME and April 26, 2019. Retail segments. The Bank’s Owner-Partner-Manager model aids in its 21,000+ employees feeling encouraged Opportunities to align closely with the organization’s objectives backed by its brand ethos and strategic pillars, and helping to India is among of the fastest growing major economies fulfill its vision and mission in the long-term. The Bank in the world with the potential to become one of the top continues to attract and retain best in class talent as three global economies over the next decade. As a full evident from Fourteenth Rank in LinkedIn list of ‘Top 25 service commercial bank with products across Corporate, Companies where Indians want to work’ for 2019. MSME, Retail and Transaction Banking segments, among others and various markets, YES BANK is geared to YES BANK is leading the new-age payments space, benefit from this opportunity. ranked No. 1 as Remitter Bank by NPCI for IMPS in the peer group for FY 2018-19 and ranked No. 1 in Moreover, Private sector capex has been low for the merchant transactions for UPI with a market share of 35% past several years in India leading to gradual increase in March 2019. In API Banking, the Bank has the most in Capacity Uitlization levels. Improvement in Private comprehensive offering with 12 services available across sector Capex levels is likely to create significant growth the platform which has over 850 customers across opportunities for the Financial Services sector in India. payments and collections. The Platform throughput increased 2.25x by value in FY 2018-19. The Bank In addition to Banking products and services, the Bank’s commands nearly 10% market share of the individual three subsidiaries namely - YES Securities (India) Limited, inward remittance market share in CY18. YES Asset Management (India) Limited, YES Trustee Limited, enable more holistic wealth management service As a new generation Bank unencumbered by legacy to the customers. The goal is to increase the amount of systems, YES BANK has been able to invest in technology business the Bank does with existing customers by building infrastructure and applications to enhance customer on the relationships and cross-selling other banking and experience across all service delivery channels, including advisory products. The Bank expects that these initiatives digital banking. Adoption of ART (Alliances, Relationships, will further diversify the sources of revenue. Technology) approach for focused digital expansion along with Fintech Accelerator Program aids the Bank in YES BANK currently has 2.6% market share in advances remaining ahead of the competition. and 1.7% in deposits among the Scheduled Commercial Banks in India. Leveraging of technology, relentless focus Weaknesses on service levels and improved reach will aid the Bank in acquiring higher market share. YES BANK’s consistent track record of growth headlines its performance; however, the Bank is a relatively smaller Threats player as yet in the Indian banking sector, indicating room for growth. The banking and financial sector is closely intertwined with the country’s economic system and performance; The Bank’s Corporate advances constitute 65.6% of Total key threat therefore would be a slowdown in the Advances vis-à-vis 34.4% for Retail & MSME. To mitigate economic activity. this concentration, the Bank is rapidly increasing granularity of its advances book with additional focus Fintech companies using technology to serve customers at on Retail Banking advances which grew at 62%% Y-o-Y lower costs may pose threat to the Bank. Thus, YES BANK in FY 2018-19. On the liabilities side, the Bank has a is investing in the digital space by incorporating digital CASA ratio of 33.1%. The Bank is continuing to invest in capabilities across a wide range of functions to effectively physical (Branches and Human Capital) as well as digital compete with the latest technological advancements. infrastructure and is adopting a Liabilities led approach to aggressively grow and granularise its Liability franchise. The laws and regulations governing the banking sector in India, including those governing the products and Also, the Bank has a CET1 (Common Equity Tier) ratio services that the Bank provides or proposes to provide of 8.4%, requiring it to re-balance its growth profile. may change in the future. Any such changes may require However, the Bank has time and again demonstrated the Bank to modify its business, which may adversely ability to raise different forms of capital to support affect its financial performance. its growth, and the Board has renewed its approval

98 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

Directors’ Report

To the Members, members who are doyens in their chosen field of expertise and have a rich experience in the Industry which can Your Directors are pleased to present the Fifteenth Annual benefit the Bank: Mr. Uttam Prakash Agarwal (ex-President Report on business and operations of the Bank together ICAI), Mr. Thai Salas Vijayan (Ex IRDAI & LIC Chairman), with the audited financial statements (consolidated as Mr. Maheswar Sahu (Ex Additional Chief Secretary, Govt. well as standalone) for the year ended March 31, 2019. of Gujarat) and Mr. Anil Jaggia (Ex CIO, HDFC Bank).

BUSINESS OVERVIEW AND OUTLOOK Further, the Indian Partners viz. Mr. Rana Kapoor and Ms. Madhu Kapur, Ms. Shagun Kapur Gogia & The Bank showed continued acceleration and Mr. Gaurav Kapur have inter-se agreed and jointly momentum in building a strong retail franchise with recommended the names of Mr. Ravindra Kumar Khanna retail advances growing 62.3% Y-o-Y in Financial Year and Ms. Shagun Kapur Gogia as their representative (FY) 2018-19 to now comprise 16.7% of total advances. directors on the Board of the Bank. Accordingly, the Consequent to the Bank’s retail focus, the branch Board of the Bank at its meeting held on April 26, 2019, network stood at 1,120 branches and 1,456 ATMs approved the appointment of Mr. Ravinder Kumar Khanna (including Bunch Note Acceptors) as on March 31, and Ms. Shagun Kapur Gogia as Additional (Non-Executive 2019. Digitization remains a key focus area for the Bank Non-Independent) Indian Partners' Representative to further grow the Retail/MSME segments as well as Directors, on the Board of the Bank w.e.f. April 26, 2019. the Transaction Banking business. The Bank already dominates the new age payments space with the highest Most importantly, through this transition phase, the market share in UPI P2M transactions with ~8x growth in business of the Bank continued its momentum as evident Volumes in FY 2018-19. from sustained growth in balance sheet with 18.7% Y-o-Y growth in advances during FY 2018-19 and 13.4% Superior structuring capabilities in the Corporate Segment Y-o-Y growth in Deposits. Even Revenue and Profitability remains an area of Strength and the Bank will continue to parameters showed resilience with 26.8% Y-o-Y growth leverage this in a calibrated manner as it embarks upon a in Net Interest Income and 5.0% Y-o-Y growth in Pre compliance led culture with a prudent accounting policy. Provision Operating Profit.

STATE OF THE AFFAIRS OF THE BANK Another important focus area during FY 2018-19 for the Bank was assuring the stakeholders regarding the Bank’s FY 2018-19 was a significant year in the Bank’s Asset Quality. Steps towards this include: lifecycle when the Bank successfully navigated 1. No disclosure requirements under the RBI through leadership transition. The Reserve Bank regulations on disclosures of divergences in asset of India (RBI) in September 2018, intimated that classification and provisioning, pursuant to the Mr. Rana Kapoor may remain the MD & CEO of the Bank till conclusion of its FY 2017-18 RBI Annual Supervisory January 31, 2019. In addition, over the following months, Process. there were changes in the Bank’s Directorate including the Chairman of the Bank. 2. The Bank has proactively created contingency Provision of about `21,000 million during the year, In response to this, the Board of Directors rose to the pursuant to a review of the Bank’s credit portfolio. challenge and successfully completed the process of 3. Providing proactive disclosures with respect to appointment of a new MD & CEO within the stipulated exposures to sensitive sectors and below investment time provided by the RBI. The Directors whole heartedly grade assets as well as other details such as welcome Mr. Ravneet Singh Gill as the new MD & CEO outstanding SMA 2 proportion to total advances. who has joined the Bank on March 1, 2019. The Board express its full faith that he will take the Bank to newer YES BANK also successfully raised Non-Convertible, heights in this environment which is filled with numerous Redeemable, Unsecured, BASEL III compliant Tier II challenges as well as opportunities. Bonds worth `30,420 million during Q2 FY 2018-19. At the time of issue, CARE had assigned a rating of ‘CARE Further, the Board of Directors have also strengthened AAA’ (Outlook: Stable) and India Ratings had assigned a itself through, appointment of Mr. Brahm Dutt as the rating of ‘IND AA+’ (Outlook: Stable). Currently, CARE has Chairman of the Bank, and appointment of four new Board assigned a rating of ‘CARE AA+’ (Outlook: Credit watch

Annual Report 2018-19 99 with developing implications) w.e.f. November 28, 2018 Exchange Securities Trading Limited (SGX) and the India and India Ratings has assigned a rating of ‘IND AA+’ International Exchange IFSC at GIFT City, Gandhinagar. (Outlook: Negative) w.e.f. November 2, 2018. Further information on the Business overview and outlook On February 18, 2019, the Bank successfully completed and State of the affairs of the Bank is discussed in detail the repurchase of the Medium-Term Note (MTN) Program in the Management Discussion & Analysis section of the amounting to USD 122,854,000 out of USD 150 million Annual Report. at a fixed price of 94.25% of the Face Value of the Notes. The MTN is listed on the London Stock Exchange There is no change in the nature of business of the Bank International Securities Market (LSE ISM), the Singapore for the year under review.

FINANCIAL PERFORMANCE (STANDALONE)

` in million April 1, 2018 to April 1, 2017 to Particulars March 31, 2019 March 31, 2018 Deposits 2,276,101.82 2,007,381.48 Borrowings 1,084,241.09 748,935.81 Advances 2,414,996.02 2,035,338.63 Total Assets/Liabilities 3,808,261.65 3,124,456.03 Net Interest Income 98,090.31 77,370.59 Non-Interest Income 45,901.53 52,238.34 Operating profit 81,349.07 77,481.13 Provisions and Contingencies 57,775.60 15,538.04 Profit before Tax 23,573.47 61,943.09 Provision for taxes 6,370.68 19,697.46 Net Profit 17,202.79 42,245.64 Add: Surplus/(Deficit) brought forward from last period 103,753.02 79,333.92 Amount available for appropriation 120,955.80 121,579.55 Appropriations Statutory Reserve under Section 17 of the Banking Regulation Act, 1949 4,300.70 10,561.41 Capital Reserve 1,010.10 659.65 Investment Reserve 6.71 - Investment Fluctuation Reserve 539.07 - Dividend and Dividend Tax paid 7,503.64 6,605.48 Surplus carried to Balance Sheet 107,595.60 103,753.02 Key Performance Indicators Net Interest Margin 3.20% 3.50% Return on Annual Average Assets 0.50% 1.60% Return on Equity 6.53% 17.67% Cost to Income Ratio 43.50% 40.22%

The Bank posted Net Revenues (Net Interest Income and the Net Profit have been effected as per the table given other income) of `143,991.84 million and Net Profit of above. Please refer to the section on Financial and `17,202.79 million for FY 2018-19. The Net Revenues Operating Performance in the Management Discussion and Net Profit for FY 2017-18 was `129,608.93 million and Analysis for a detailed analysis of financial data. and `42,245.63 million respectively. Appropriations from

100 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

DIVIDEND AWARDS AND RECOGNITIONS The Bank is rewarding its shareholders by way of During the year under review, the Bank was recognized in consecutive cash dividends. The Board of Directors have various ways/by various institutions and some of the key recommended Dividend at a rate of `2 per equity share awards presented to the Bank are listed below: (100%) for the year ended March 31, 2019 subject to ▲▲ YES BANK won the ‘Product Innovation of the approval of the Shareholders at the 15th Annual General Year’ Award among 100+ financial services Meeting as against `2.70 per equity share (135%) of companies at International Finance Corporation’s `2 each for the previous year ended March 31, 2018. (IFC Washington’s) Global SME Finance Awards. This dividend shall be subject to tax on dividend to be paid by the Bank. The details about the Dividend Policy of ▲▲ YES BANK became first Indian Bank to join ‘Natural the Bank have been provided in the Report on Corporate Capital Coalition’ – a global multi-stakeholder Governance forming part of this Annual Report. collaboration, wherein the bank will integrate natural capital thinking into its strategy & operations. TRANSFER TO RESERVES ▲▲ YES BANK was honored at the 20th edition of the coveted global award, The Asset Triple A Country As per requirement of RBI Regulations, the Bank has Awards 2018 with ‘Best New Bond India’ for transferred the following amounts to various reserves launching the largest debut international bond during Financial Year ended March 31, 2019: issuance, priced at the tightest spread over US ` in million treasuries by an Indian bank since 2008. Amount transferred to Amount ▲▲ YES BANK won the coveted ‘Golden Peacock Award Statutory Reserve 4,300.70 For Sustainability’ – 2018. Capital Reserve 1,010.10 ▲▲ YES BANK was honored with the runner-up award at Investment Reserve 6.71 the 30th Qualtech Qimpro Award in the Continuous Investment Fluctuation Reserve 539.07 Improvement category, winning in the Qualtech Qimpro Awards for the third year in a row. CAPITAL RAISING & CAPITAL ▲▲ YES BANK was felicitated by Business France and ADEQUACY RATIO (CAR) Indo-French Chamber of Commerce and Industry for ‘Promoting & Facilitating Indo-French Bilateral During the FY 2018-19, the Bank has issued 12,065,794 Relations’. equity shares of `2 each pursuant to the exercise of stock options aggregating to `24.13 million. ▲▲ YES BANK won the SKOCH Editor’s Choice Award for ‘YES Rewardz’ Loyalty Program at the Post allotment of aforesaid equity shares, the issued, 55th SKOCH Summit. subscribed and paid up share capital of the Bank stands at `4,630.07 million comprising of 2,315,033,039 equity ▲▲ YES BANK was adjudged Global winner in shares of `2 each as on March 31, 2019. Payments at the ‘Technology Project Awards-2018’, a prestigious award recognizing innovation in The Bank has not issued any equity shares with differential financial technology instituted by The Banker, a voting rights during the year. London-based leading global financial publication During the year, the Bank has raised Non-convertible promoted by The Financial Times (FT). Redeemable Unsecured Basel III compliant Tier II Bonds ▲▲ YES BANK has the highest number of its facilities of `30,420 million. under environment management system ISO The Bank is well capitalized with a Capital Adequacy Ratio 14001:2015 certification ambit in the BFSI Sector, of 16.5% as at March 31, 2019; of which Tier I Capital leading the BFSI sector globally with the highest Ratio was 11.3% and Tier II Capital Ratio was 5.2%. number of ISO 14001 certified green facilities. This extraordinary global achievement by an Indian DEPOSITS bank comes on the back of YES BANK’s unmatched commitment to environmental sustainability. Being a banking company, the disclosures required as ▲▲ YES BANK became the only Indian bank to be per Rule 8(5)(v) & (vi) of the Companies (Accounts) Rules, selected in the Dow Jones Sustainability Indices 2014, read with Sections 73 and 74 of the Companies (DJSI) Emerging Markets for the fourth year in a row Act, 2013 are not applicable to the Bank. (2015-2018) o ~3,500 companies invited. The Bank was selected among 50 banks (from 267 banks) out of the 13 invited Indian banks, The Bank is the only

Annual Report 2018-19 101 Indian Bank to make it to the index of 93 companies Accolades for Small & Medium Enterprises Financing: from 14 countries included in the DJSI Emerging ▲▲ YES BANK was awarded ‘SME Bank of the Year – Markets Index (EMI). The 2018 Index became India’ in the Asian Banking & Finance Retail Banking effective as of September 24, 2018. Awards, Singapore in July 2018. ▲▲ YES BANK was adjudged winner for outstanding ▲▲ YES BANK was adjudged as the ‘Best Bank in India performance in Instant Payment Products (UPI + for Small and Medium-Sized Enterprises (SMEs)’ at IMPS + BHIM + USSD), at the National Payments the Asiamoney Best Bank Awards 2018 and 2019. Excellence Awards (NPCI) 2017 hosted by National Payments Corporation of India (NPCI) in May 2018. ▲▲ YES BANK was recognized as the ‘Best Banking Solutions provider for SMEs’ at Engineering Export ▲▲ YES BANK was selected in FTSE4Good Emerging Promotion Council (EEPC India) 48th Northern Region Index, for the second consecutive year. FTSE Russell Awards for Export Excellence, Dehradun. benchmarks ~USD 12.5 trillion in assets across 80 countries and 98% of the investable global market. Multiple recognitions for CSR practices: YES BANK received an ESG Rating which is above ▲▲ YES BANK was adjudged as winner in ‘Excellent the required index inclusion threshold for emerging CSR for Women Empowerment’ category of Social economies (2.2) and developed markets (3.5) Footprints Awards 2018 for YES BANK’s innovative reiterating YBL’s ESG leadership with its global blended finance facility, aimed at promoting peers. The Bank was selected among 87 banks from environmentally sustainable livelihood among emerging markets including Itau Unibanco Holdings, women salt farmers in Gujarat. Brazil & SBERBANK, Russia. ▲▲ YES BANK was adjudged the winner in ‘Safe Drinking ▲▲ YES BANK was recognized with three Gold Awards Water’ category of Social Footprints Awards 2018 at the India Content Leadership Award- 2018 for for successful implementation of Water ATMs and compelling Marketing & Corporate Communication Water Health Centers under Water and Livelihood initiatives for its flagship Fintech start-up Business project in India. Innovation Program, YES FINTECH and for successfully running CFO Insights, a magazine read ▲▲ YES BANK received ‘CSR Excellence Award’ for widely by Chief Financial Officers (CFOs). its first-of-its-kind MSME CSR project ‘Say YES to Sustainable MSMEs in India’ at the Apex India Awards. ▲▲ YES BANK was recognized with the ‘Best Implementation of Digital Payments’ award at the EMPLOYEES STOCK OPTION SCHEME 4th edition of prestigious BW Businessworld Digital India Summit & Awards 2018. The Bank has instituted Stock Option Schemes to enable its employees to participate in the Bank's future growth ▲▲ YES BANK was adjudged as the ‘Best Bank in India’ and financial success. The Bank provides its employees for Payments, Blockchain Initiative, API Initiative, a platform for participating in important decision making Financial Supply chain Management Deal, Trade and instilling long-term commitment towards future Finance Deal, Automation Application and Trade growth of the Bank by way of rewarding them through Finance at The Asian Banker Transaction Banking Stock Options. In terms of compensation and benefit Awards 2018. policy of the Bank, employees are granted options as part ▲▲ YES BANK recognized with the Best Technology of Annual Performance Review process based on their Bank of the Year, Best use of Data & Analytics for performance as well as to ensure their retention, and to Business Outcome and the Most Customer-Centric hire the best talent for its senior management and key Bank using Technology Awards in the Medium Size positions. Banks category at the Indian Banks’ Association The Bank has from time to time granted Stock Options (IBA) Banking Technology Innovation Awards. to its employees under the following Employee Stock ▲▲ YES BANK applauded as Winner in ‘Innovation in Option Plans viz., Data Science’ at the 9th edition of Aegis Graham Bell ▲▲ Joining Employee Stock Option Plan II (JESOP II); Award 2018, for the industry-first project ‘Yes EEE (Engage Enrich Excel)’. ▲▲ Joining Employee Stock Option Plan III (JESOP III); ▲▲ YES BANK has been selected by Global Finance magazine as Best Debt Bank in Asia Pacific for deals ▲▲ YBL ESOP (consisting of two sub-schemes announced/completed in 2018 JESOP IV / PESOP I);

102 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

▲▲ YBL JESOP V / PESOP II (Consisting of three sub schemes JESOP V / PESOP II / PESOP II -2010); and

▲▲ YBL Employee Stock Option Scheme, 2018 (YBL ESOS 2018) [Consisting of YBL Joining Employee Stock Option Plan, 2018 (JESOP 2018); YBL Performance Employee Stock Option Plan, 2018 (PESOP 2018); and YBL MD & CEO (New) Stock Option Plan, 2019 (MD & CEO Plan 2019).

JESOP II and JESOP III were in force for employees joining the Bank up to March 31, 2006 and March 31, 2007 respectively. Grants under PESOP II had been discontinued w.e.f. January 20, 2010. Grants under YBL ESOP and YBL JESOP V / PESOP II had been discontinued w.e.f. June 12, 2018 pursuant to coming into effect of YBL ESOS 2018. However, any options already granted under the abovementioned plans would be valid in accordance with the terms & conditions mentioned in the plans.

Options under all the aforesaid plans are granted for a term of 10 years (inclusive of the vesting period) and are settled with equity shares being allotted to the beneficiary upon exercise.

In accordance with the various Employee Stock Option Plans/ Schemes of the Bank as mentioned above, the Employees can exercise the options granted to them from time to time as per the below vesting schedule:

ESOP Plan Exercise period JESOP II 50% after 3 years and balance after 5 years from the Grant date JESOP III 50% after 3 years and balance after 5 years from the Grant date JESOP IV 50% after 3 years and balance after 5 years from the Grant date JESOP V 50% after 3 years and balance after 5 years from the Grant date PESOP I 25% after each year from the Grant date PESOP II 30%, 30% & 40% after each year from the Grant date PESOP II - 2010 30%, 30% & 40% each year, from end of 3rd year from the Grant date JESOP 2018 50% after 3 years and balance after 5 years from the Grant date PESOP 2018 30%, 30% & 40% each year, from end of 3rd year from the Grant date MD & CEO Plan 2019 20%, 30% & 50% each year, from end of 1st year from the Grant date

Effective from June 13, 2018, all new options have been granted under the YBL ESOS 2018 (which inter-alia consists of JESOP 2018, PESOP 2018 and MD & CEO Plan 2019). The YBL ESOS 2018 and plans formulated thereunder are in compliance with the SEBI (Share Based Employees Benefits) Regulations, 2014 as amended from time to time. Source of shares are primary in nature, since the Bank has been issuing new equity shares upon exercise of options. No stock options were issued to the Directors of the Bank except Mr. Ravneet Singh Gill, MD & CEO of the Bank.

Annual Report 2018-19 103 ------

2018 table 1 table 2 June 12, YBL Refer Sub Refer Sub Refer 5,000,000 5,000,000 5,000,000 5,000,000 MD & CEO 1,50,00,000 PLAN 2019 Refer Note 1 Refer Refer Note 2 Refer ------2018 table 1 table 2 June 12, 2018 265,000 265,000 265,000 Refer Sub Refer Sub Refer Refer Note 1 Refer YBL PESOP 4,00,00,000 Refer Note 2 Refer

------YBL ESOS 2018 June table 1 12, 2018 417,500 417,500 417,500 417,500 Refer Sub Refer Refer Note 1 Refer 2,00,00,000 Refer Note 2 Refer JESOP 2018 - table 1 100,000 100,000 18, 2008* Refer Sub Refer 7,619,970 7,619,970 7,619,970 5,499,330 5,499,330 II - 2010 2,338,200 September 43,733,310 43,733,310 33,875,140 33,875,140 33,875,140 17,822,290 17,822,290 Refer Note 1 Refer 101,360,000 YBL PESOP 614,457,888 614,457,888 Refer Note 3 Refer - - - - - II 753,600 753,600 753,600 18, 2008* 1,523,050 1,523,050 2,276,650 76,140,000 September Refer Note 1 Refer 38,502,666 YBL PESOP Refer Note 3 Refer YBL JESOP V/PESOP II table 1 table 2 V 844,750 844,750 522,500 18, 2008* 2,530,751 2,530,751 Refer Sub Refer 3,901,451 2,797,274 2,797,274 2,797,274 Refer Sub- Refer September 12,837,326 12,837,326 12,837,326 47,500,000 15,956,850 YBL JESOP Refer Note 1 Refer 297,015,481 297,015,481 Refer Note 3 Refer - - - - - 2007 125,375 125,375 125,375 247,375 247,375 122,000 122,000 3,415,088 August 29, 29, August (PESOP I) YBL ESOP 25,000,000 Refer Note 1 Refer Refer Note 2 Refer ------YBL ESOP 2007 2,750 2,750 3,500 3,500 6,250 80,290 80,290 August 29, 29, August YBL ESOP 25,000,000 Refer Note 1 Refer (JESOP IV ) Refer Note 2 Refer ------2006 July 24, JESOP III 25,000,000 Refer Note 1 Refer Refer Note 2 Refer ------2006 July 24, JESOP II 25,000,000 Refer Note 1 Refer Refer Note 2 Refer ) `

Personnel (SMP) Personnel received a grant in any one year of options, amounting to 5% or more of options granted during that year Any other employee who Date of Shareholdersʼ Approval Date of Shareholdersʼ Number of Options approved Total Number of options Total outstanding at the beginning of period of Options granted No. Total (during FY 2018-19) The Pricing Formula (during FY 2018-19) Options Vested Options Exercised (during FY 2018-19) of shares arising as a No. Total of option result of exercise Options lapsed/ forfeited (during FY 2018-19) of Options outstanding at No. Total the end of year at of Options exercisable No. Total the end of year of terms Options Variation of Money realized by exercise Options (during FY 2018-19) (in of Options in force No. Total of Options granted to: No. Total (i) Senior Management (ii) Various details including option movement during the year under aforementioned Schemes/ Plans, i.e. JESOP II, JESOP III, YBL ESOP, YBL JESOP V/PESOP II and JESOP II, III, YBL ESOP, details including option movement during the year under aforementioned Schemes/ Plans, i.e. Various ESOS 2018 respectively are as follows:

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231.15 YBL 7.29 7.29 7.22 7.22 ` ` MD & CEO PLAN 2019 Nil 2018 YBL PESOP YBL ESOS 2018 Nil JESOP 2018 Nil 80.64 80.64 142.30 II - 2010 YBL PESOP Nil 29.77 29.77 25.28 II YBL PESOP 7.38/- 414.98 millions), the basic earnings per share would have been Nil ` ` YBL JESOP V/PESOP II 18.43) per share and diluted earnings would have been 18.06) per share. ` 179.61 179.61 106.18 106.18 ` V YBL JESOP - Nil 29.77 29.77 (PESOP I) YBL ESOP 7.45 (Previous year: 7.45 7.38 (Previous year: 7.38 ` ` - Nil YBL ESOP 375.18 millions (Previous year: 375.18 22.94 ` YBL ESOP (JESOP IV ) - - Nil JESOP III 18.24) per share instead of per share instead of 17.88) ` ` - - Nil JESOP II The Bank has charged Nil amount, being the intrinsic value of stock options granted for year ended March 31, 2019 and Scholes pricing model), for and accounting of options, net profit method (based on Black- 2018. Had the Bank adopted Fair Value after tax would have been lower by (Previous year: (Previous year: ) ` the weighted-average values of share price, exercise price, expected volatility, expected option life, expected dividends, the risk-free interest rate and any other inputs to the model; dividends, the risk-free expected option life, expected volatility, expected price, exercise the weighted-average values of share price, exercise; expected early the method used and assumptions made to incorporate effects of volatility was based on historical volatility; and to which expected of the extent volatility was determined, including an explanation how expected condition. such as a market whether and how any other features of the option grant were incorporated into measurement fair value, are granted options, during any one year equal to or 1% of the issued exceeding outstanding capital (excluding warrants and conversions) of the Company at time of grant Identified employees who ) ` (iii) Share (EPS) Diluted Earnings Per of the Bank after considering effect of potential equity shares on of Options account of exercise Impact of the difference between of the Options the Intrinsic Value of the Options and the Fair Value on Profits and EPS average price of the Weighted during the year shares exercised (in average fair values of the Weighted outstanding options (in approval dated September 3, 2009 and June 28, 2011 respectively. finally to 4.5 crores by the shareholders’ *The option under the scheme were increased subsequently from 1 crore to 3 crores and Board of India (‘SEBI’) has prescribed two methods to account for stock grants; namely (i) the intrinsic value method; (ii) fair method. The Bank adopts The Securities and Exchange pricing model with the following calculates the fair value of options at time grant, using Black-Scholes value method to account for the stock options it grants employees. The Bank also assumptions: (a) (b) (c) (d)

Annual Report 2018-19 105 March 31, 2019 Risk free Interest Rate 6.29%-9.23% Expected life 1.5 yrs - 7.5 yrs Expected Volatality** 25.01%-48.72% Expected dividends 1.50% **Expected volatility is average volatility for expected life of the option. Note 1: Being the closing price of the Equity Shares on the stock exchange with the highest trading volumes on the last working day prior to the date of grant. Note 2: There is no variation in the terms of the options during the Financial Year ended March 31, 2019. Note 3: The Shareholders of the Bank by way of Postal Ballot on January 17, 2015 had approved certain modifications in terms of YBL JESOP V / PESOP II Scheme (consisting of three sub-schemes JESOP V / PESOP II / PESOP II-2010). Sub-table 1: Following are the total number of stock options that have been granted to Senior Management Personnel (“SMP”) of the Bank and its subsidiaries during the financial year ended March 31, 2019: Scheme Name of Employees Designation Options granted Grant Price YBL PESOP 2018 Akash Prasad Group President 100,000 384.35 YBL JESOP 2018 Amar Kirti Ambani President 25,000 192.35 YBL JESOP 2018 Anand Deva Priya President 30,000 384.35 YBL JESOP 2018 Ashish Joshi Senior President 60,000 200.85 YBL JESOP 2018 Binoj Vasu Senior President 50,000 200.85 PESOP II - 2010 Mahesh Rajaraman Group President 50,000 313.05 PESOP II - 2010 Neeraj Dhawan Senior Group President 50,000 313.05 JESOP V Raj Ahuja Senior Group President 400,000 313.05 YBL PESOP 2018 Rajiv Anand Group President 150,000 384.35 YBL MD & CEO Ravneet Singh Gill MD & CEO 5,000,000 231.15 PLAN 2019 YBL JESOP 2018 Sai Venkataramana Kosuri Senior President 35,000 192.35 YBL PESOP 2018 Vikash Modi Senior President 15,000 192.35 YBL JESOP 2018 Vikram Mago President 25,000 200.85 YBL JESOP 2018 Vineet Dhar Group President 100,000 192.35 Sub-table 2: Following are the details of the employees to whom 5% or more of options were granted during the financial year ended March 31, 2019.

Scheme Name of Employees Designation Options granted Grant Price JESOP V Raj Ahuja Senior Group President 400,000 313.05 YBL PESOP 2018 Rajiv Anand Group President 150,000 384.35 YBL MD & CEO Ravneet Singh Gill MD & CEO 5,000,000 231.15 PLAN 2019

None of the employees were granted options equal to or exceeding 1% of the issued capital of the Bank at the time of grant during FY 2018-19. DIVERGENCE IN ASSET CLASSIFICATION AND PROVISIONING FOR NPAS In terms of the RBI circular no. DBR.BP.BC.No.32/ 21.04.018/2018-19 dated April 1, 2019, the banks are required to disclose the divergences in asset classification and provisioning consequent to RBI's annual supervisory process in their notes to accounts to the financial statements, wherever either or both of the following conditions are satisfied: (a) the additional provisioning for NPAs assessed by RBI exceeds 10 per cent of the reported profit before provisions and contingencies for the reference period and (b) the additional Gross NPAs identified by RBI exceed 15 per cent of the published incremental Gross NPAs for the reference period. Based on the above, no disclosure on divergence in asset classification and provisioning for NPAs is required with respect to RBI's annual supervisory process for FY2018-19.

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SUBSIDIARY, ASSOCIATE AND JOINT and mid-market corporate and financial sponsor clients VENTURE COMPANIES through key products such as Mergers & Acquisition Advisory and Private Equity fund-raising. As on March 31, 2019, the Bank had three wholly-owned subsidiaries, YES Securities (India) Limited (‘YSIL’), YES YSIL’s highly-experienced teams offer expertise across a Asset Management (India) Limited (‘YAMIL’) and YES variety of sectors including Food and Agribusiness; Media Trustee Limited (‘YTL’). and Entertainment; Consumer Markets; Infrastructure and Engineering, Procurement and Construction (EPC), The Bank does not have any material subsidiary, associate Banking, Financial Services and Insurance (BFSI), Internet & and joint venture company. E-commerce, Industrials and Logistics to corporate clients. Performance and Financial Position of Merchant Banking: YSIL’s Merchant Banking practice has a strong focus on capital market activities offering a Subsidiary Companies comprehensive bouquet of products including Initial Public YES Securities (India) Limited (YSIL) Offerings (IPO), Qualified Institutional Placements (QIP), Rights Issues, Open Offer, Buyback, Delisting and other advisory YES Securities (India) Limited or YSIL, the Bank’s services. During FY 2018-19, the highly-experienced team wholly-owned capital markets intermediary, completed successfully engaged with leading Indian companies as five years of operations in FY 2018-19. YSIL, today, offers a fund-raising partner and trusted advisor for their capital retail, HNI and corporate customers a comprehensive market requirements. range of products and services, encompassing Investment Banking (including a dedicated Sustainable Investment Institutional Sales & Trading Banking practice), Merchant Banking, Wealth Broking, FY 2018-19 was a significant year as institutional brokerage Advisory, Research and Institutional Equities services. rose 57 % over FY 2017-18. The team successfully secured empanelment as broker across major Asset Management YSIL is a SEBI* registered Stock Broker holding and Insurance companies. Besides, backed by improved membership of National Stock Exchange (NSE), Bombay client service, execution excellence and superior research, Stock Exchange (BSE) and Multi Commodity Exchange the team succeeded in reactivating transaction activity from (MCX). YSIL is also a SEBI-registered Category I Merchant valued institutional clients. YSIL has proactively engaged Banker, Investment Adviser and Research Analyst. and ideated with clients’ on capital market insights, corporate *Securities and Exchange Board of India road shows and regular research inputs. Wealth Broking As on March 31, 2019, YSIL is empaneled with 30 In FY 2018-19, YSIL’s Wealth Broking business continued institutions. to enhance its product and service proposition to YES Trustee Limited (YTL) & YES Asset offer customers a more comprehensive investment Management (India) Limited (Yamil) management experience. YSIL offers a best-in-class 3-in- 1 proposition in major cities across India. Its online trading YES BANK Limited has incorporated YES Asset platform (available on web and mobile app) witnessed Management (India) Limited on April 21, 2017 and consistent growth in client transaction volumes further YES Trustee Limited on May 3, 2017 as wholly owned complementing the growing engagement between high subsidiaries for the mutual fund business. net-worth clients and the dedicated dealing desk. YAMIL was granted an approval by Securities and In FY 2018-19, YSIL took significant strides in Exchange Board of India (“SEBI”) on July 3, 2018 to act as achieving the long-term vision of establishing itself as a an Asset Management Company / Investment Manager to research-backed and client-centric multi-asset wealth YES Mutual Fund. solutions provider. YSIL has set up a strong product team YAMIL pursues to combine its investors’ and stakeholders’ with expertise across asset classes – Equity, Derivatives, interests and bring out the optimum solutions for its Debt, Advisory/Fund Management, Commodities, investors. Towards the same, YAMIL has launched its First Currency, as well as a dedicated team focusing on Mutual Fund Scheme “YES Liquid Fund”, NFO which was developing digital products. During the year, YSIL also open from January 2, 2019 to January 16, 2019. The NFO significantly strengthened its research credentials has received extremely good response. Further, Average and expanded its research coverage universe across Assets Under Management (AAUM) of YES Mutual Fund fundamental, thematic and technical insights. for the period from January 16, 2019 to March 31, 2019 Investment Banking stood at `2000.12 crore. The Investment Banking team provides Mergers and YES Mutual Fund is presently focusing on tailoring Acquisition (M&A) and Capital Advisory services to large liquidity management solutions for Corporates, HNI’s and

Annual Report 2018-19 107 Retail investors. It had further received SEBI’s approval to Committee (N&RC) appointed Mr. Ravneet Singh Gill as launch an Ultra Short-Term Fund and YES Overnight Fund. an Additional Director w.e.f. the date of his taking charge and to hold office up to the date of the ensuing Annual YTL is acting as a Trustee Company to YES Mutual Fund General Meeting (AGM). In the said meeting the Board (YMF). It will provide trusteeship services to all the funds also appointed Mr. Ravneet Singh Gill as the Managing launched by YMF. Director and Chief Executive Officer (MD & CEO) of Pursuant to the provisions of Section 129(3) of the the Bank for a period of three (3) years commencing Companies Act, 2013, a statement containing salient from the date of his taking charge as MD & CEO, on features of Financial Statements of subsidiaries in Form the terms & conditions as approved by the RBI and AOC-1 forms part of the Annual Report. The Financials as may be further decided by the Board of Directors of the subsidiaries of the Bank are available on the from time to time, subject to necessary sanctions and website of the Bank (www.yesbank.in). Any member approvals from the RBI and the Shareholders of the who is desirous to have a copy of the annual accounts Bank, as may be applicable. Mr. Ravneet Singh Gill took of the subsidiaries may write to the Company Secretary charge as MD & CEO of the Bank w.e.f. March 1, 2019. of the Bank. Financials of Bank and its subsidiaries shall The Bank has received a notice in writing from a member also be available for inspection by members or trustees proposing the candidature of Mr. Ravneet Singh Gill as of the holders of any debentures of the Bank at its MD & CEO on the Board of the Bank. Further, the N&RC and Registered office. Board of Directors of the Bank have also recommended RATINGS OF VARIOUS DEBT the appointment of Mr. Ravneet Singh Gill as MD & CEO, not liable to retire by rotation, to the Shareholders at the INSTRUMENTS ensuing AGM. During the year under review, the Bank had raised `30,420 million by way of issue of rated listed unsecured Mr. Ajai Kumar Tier II Bonds in the nature of Debenture. This instrument Mr. Ajai Kumar, Non-Executive Non-Independent Director, has been rated by rating agencies namely Credit Analysis was appointed as an Interim MD & CEO of the Bank on and Research (‘CARE’) and India Ratings & Research Pvt. January 29, 2019, to hold office as an Interim MD & CEO Ltd. (‘India Ratings’), A Fitch Group Company. The details for a period from February 1, 2019 to February 28, 2019. of the instrument as well as the ratings are as below: The Bank had received approval from RBI on January 30, ▲▲ The Bank issued 30,420 Rated Listed 2019 for appointment of Mr. Ajai Kumar as an Interim MD Non‑Convertible Redeemable Unsecured Basel III & CEO. Further, resolution for ratification of appointment Compliant Tier II bonds in the form of Debentures and remuneration of Mr. Ajai Kumar as Interim MD & CEO issued on Private Placement basis of Face Value is proposed to be passed at the ensuing AGM. of `10,00,000/- each fully paid up aggregating to `30,420 million on September 14, 2018 and the Dr. Pratima Sheorey issue was rated by CARE and India Ratings. At Dr. Pratima Sheorey was appointed as an Additional the time of issue, CARE had assigned a rating of Director (Independent) on the Board of the Bank w.e.f. ‘CARE AAA’ (Outlook: Stable) and India Ratings had April 26, 2018 and was appointed as an Independent assigned a rating of ‘IND AA+’ (Outlook: Stable). Director by the Shareholders at the 14th AGM of the Bank Currently, CARE has assigned a rating of ‘CARE AA+’ held on June 12, 2018. (Outlook: Credit watch with developing implications) w.e.f. November 28, 2018 and India Ratings has Mr. Rentala Chandrashekhar assigned a rating of ‘IND AA+’ (Outlook: Negative) w.e.f. November 2, 2018. Mr. Rentala Chandrashekhar was appointed as an Additional Director (Independent) on the Board of the The Credit Rating and change/revision in the Credit Bank w.e.f. April 26, 2018 and was appointed as an Ratings for various debt instruments issued by the Independent Director by the Shareholders at the 14th Bank from time to time are provided in the Corporate AGM of the Bank held on June 12, 2018. Governance Report forming part of the Annual Report. BOARD OF DIRECTORS & KEY Mr. Uttam Prakash Agarwal MANAGERIAL PERSONNEL Mr. Uttam Prakash Agarwal was appointed as an Appointments/Re-appointments: Additional Director (Independent) on the Board of the Bank w.e.f. November 14, 2018, to hold office upto the Mr. Ravneet Singh Gill date of ensuing AGM. The Bank has received a notice in writing from a member proposing the candidature of The Board of Directors of the Bank on January 24, 2019, Mr. Uttam Prakash Agarwal as an Independent Director basis recommendation of the Nomination & Remuneration

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on the Board of the Bank. Further, the N&RC and Board Ms. Shagun Kapur Gogia of Directors of the Bank have also recommended Ms. Shagun Kapur Gogia was appointed on the Board the appointment of Mr. Uttam Prakash Agarwal as an as Additional (Non-Executive Non-Independent), Indian Independent Director, not liable to retire by rotation, to Partners' Representative Director w.e.f. April 26, 2019. the Shareholders at the ensuing AGM. The Bank has received a notice in writing from a member proposing the candidature of Ms. Shagun Kapur Gogia Mr. Thai Salas Vijayan as a Director on the Board of the Bank. Further, the Mr. Thai Salas Vijayan was appointed as an Additional N&RC and Board of Directors of the Bank have also Director (Independent) on the Board of the Bank w.e.f. recommended the appointment of Ms. Shagun Kapur December 3, 2018, to hold upto the date of ensuing Gogia as a Non-Executive Non-Independent Director, AGM. The Bank has received a notice in writing from a not liable to retire by rotation, to the Shareholders at the member proposing the candidature of Mr. Thai Salas ensuing AGM. Vijayan as an Independent Director on the Board of the Bank. Further, the N&RC and Board of Directors of Mr. Subhash Chander Kalia the Bank have also recommended the appointment of Mr. Subhash Chander Kalia was appointed as an Mr. Thai Salas Vijayan as an Independent Director, not Additional Director (Non-Executive Non-Independent) liable to retire by rotation, to the Shareholders at the on the Board of the Bank w.e.f. April 3, 2018 and was ensuing AGM. appointed as a Non-Executive Non-Independent Director by the Shareholders at the 14th AGM of the Bank held on Mr. Maheswar Sahu June 12, 2018. Mr. Maheswar Sahu was appointed as an Additional Director (Independent) on the Board of the Bank w.e.f. In terms of Section 152 of the Companies Act, January 24, 2019, to hold upto the date of this AGM. 2013, Mr. Subhash Chander Kalia, Non-Executive The Bank has received a notice in writing from a member Non-Independent Director, being liable to retire by proposing the candidature of Mr. Maheswar Sahu as an rotation, shall retire at the ensuing AGM and being eligible Independent Director on the Board of the Bank. Further, the for re-appointment, offers himself for re-appointment. N&RC and Board of Directors of the Bank have also recommended the appointment of Mr. Maheswar Sahu as Lt. General (Dr.) Mukesh Sabharwal (Retd.) an Independent Director, not liable to retire by rotation, to The term of office of Lt. General (Dr.) Mukesh Sabharwal the Shareholders at the ensuing AGM. (Retd.), as an Independent Director, will expire on June 13, 2019. The Bank has received a notice in Mr. Anil Jaggia writing from a member proposing the candidature of Lt. Mr. Anil Jaggia was appointed as an Additional Director General (Dr.) Mukesh Sabharwal (Retd.) as an Independent (Independent) on the Board of the Bank w.e.f. January 24, Director on the Board of the Bank. Further, the N&RC and 2019, to hold office upto the date of this AGM. The Bank Board of Directors of the Bank have also recommended has received a notice in writing from a member proposing the re-appointment of Lt. General (Dr.) Mukesh Sabharwal the candidature of Mr. Anil Jaggia as an Independent (Retd.), as an Independent Director of the Bank for a Director on the Board of the Bank. Further, the N&RC and second term upto April 24, 2020 (i.e. completion of eight Board of Directors of the Bank have also recommended years in the Bank as permissible under the Banking the appointment of Mr. Anil Jaggia as an Independent Regulation Act, 1949) or such other extended term as Director, not liable to retire by rotation, to the Shareholders may be approved by RBI, subject to maximum 5 years of at the ensuing AGM. second term as provided under Companies Act, 2013, not liable to retire by rotation, to the Shareholders of the Mr. Ravinder Kumar Khanna Bank at the ensuing AGM. Mr. Ravinder Kumar Khanna was appointed on the Board Mr. Brahm Dutt as Additional (Non-Executive Non‑Independent), Indian Partners' Representative Director w.e.f. April 26, 2019. The term of office of Mr. Brahm Dutt, as an Independent The Bank has received a notice in writing from a member Director, will expire on June 13, 2019. The Board of proposing the candidature of Mr. Ravinder Kumar Khanna Directors of the Bank, basis the recommendation of the as a Director on the Board of the Bank. Further, the N&RC and approval of RBI, had appointed Mr. Brahm Dutt, N&RC and Board of Directors of the Bank have also Independent Director, as Part-Time Chairman of the Bank. recommended the appointment of Mr. Ravinder Kumar Mr. Brahm Dutt took charge as Part-Time Chairman of Khanna as a Non-Executive Non‑Independent Director, the Bank w.e.f. January 11, 2019 pursuant to approvals not liable to retire by rotation, to the Shareholders at the received from RBI and will hold the office as Part-Time ensuing AGM. Chairman of the Bank till January 10, 2022.

Annual Report 2018-19 109 The Bank has received a notice in writing from a at the manner in which they have been dealt with and it is member proposing the candidature of Mr. Brahm Dutt more distressing that all this should have been occurred as an Independent Director on the Board of the Bank. during a critical transition period when tact, wisdom and The N&RC and Board of Directors of the Bank have also purposeful, well-considered actions were called for and recommended the re-appointment of Mr. Brahm Dutt, the resulting situation arising from recent development as an Independent Director of the Bank for the second and their handling is not conducive to the discharge of term, not liable to retire by rotation, to the Shareholders his duties. of the Bank at the ensuing AGM and he shall hold office till January 10, 2022 (i.e. tenure as Part-Time Chairman The Board places on record its sincere appreciation of the Bank). A resolution for taking on record the RBI and thanks for the valuable contributions made by approval for appointment of Mr. Brahm Dutt and approval Mr. Ashok Chawla as Part-Time Chairman of the Bank of remuneration as Part-Time Chairman of the Bank is and Mr. Saurabh Srivastava, Ms. Debjani Ghosh, proposed to the Shareholders at the ensuing AGM. Mr. Vasant Gujarathi and Mr. Rentala Chandrashekhar as Independent Directors of the Bank. The relevant details including profiles of Mr. Ravneet Singh Gill, Mr. Ajai Kumar, Mr. Uttam Prakash Mr. Rana Kapoor Agarwal, Mr. Thai Salas Vijayan, Mr. Maheswar Sahu, Mr. Rana Kapoor demitted office as MD & CEO of the Bank Mr. Anil Jaggia, Mr. Ravinder Kumar Khanna, Ms. Shagun w.e.f. the close of business hours on January 31, 2019 Kapur Gogia, Mr. Subhash Chander Kalia, Lt. General (Dr.) upon completion of RBI approved term. Mukesh Sabharwal (Retd.) and Mr. Brahm Dutt are included separately in the Notice of AGM and Report on Corporate The Board places on record its sincere appreciation Governance of the Bank forming part of the Annual Report. and thanks for the valuable services and leadership of Mr. Rana Kapoor as MD & CEO of the Bank. The Bank Retirements/Cessations: over the last fourteen and half years of performance, has demonstrated track record of consistent delivery Mr. Saurabh Srivastava of business and financial outcomes across all critical In terms of RBI letter dated January 28, 2016 & parameters such as Capital Adequacy, Profitability, March 28, 2018, Mr. Saurabh Srivastava completed his Steady Growth and look forward to carry on the tenure as Director of the Bank on April 22, 2018. excellent performance under the leadership of Mr. Ravneet Singh Gill. Ms. Debjani Ghosh Ms. Debjani Ghosh, Independent Director has resigned Key Managerial Personnel from the office of the Director w.e.f. April 26, 2018, Mr. Ravneet Singh Gill, MD & CEO, Mr. Raj Ahuja, Group due to her pre-occupation with full time engagement Chief Financial Officer and Mr. Shivanand R. Shettigar, as President of National Association of Software and Group Company Secretary of the Bank are the Key Services Companies (NASSCOM). Managerial Personnel as per the provisions of the Companies Act, 2013 and rules made thereunder. Mr. Ashok Chawla Mr. Ashok Chawla, Non-Executive (Independent) Part-Time During the year under review, Mr. Rana Kapoor demitted Chairman of the Bank, had resigned from the directorship office as MD & CEO and Key Managerial Personnel of the Bank w.e.f. November 14, 2018, mentioning that of the Bank in terms of the provisions of Section 203 during the current transition period, the Bank would need of the Companies Act, 2013 w.e.f. close of business a Chairman who could devote more time and attention. hours on January 31, 2019. Further, Mr. Ajai Kumar was appointed as an Interim MD & CEO and Key Managerial Mr. Vasant Gujarathi Personnel in terms of the provisions of Section 203 of the Companies Act, 2013 for the period commencing from Mr. Vasant Gujarathi, Independent Director, had February 1, 2019 to February 28, 2019. Mr. Ravneet resigned from the directorship of the Bank w.e.f. Singh Gill took charge as MD & CEO and Key Managerial November 14, 2018, due to his personal commitments. Personnel of the Bank in terms of the provisions of Section 203 of the Companies Act, 2013 for a period of three (3) Mr. Rentala Chandrashekhar years, w.e.f. March 1, 2019 to February 28, 2022. Mr. Rentala Chandrashekhar, Independent Director of the Bank, resigned from the directorship of the Bank w.e.f. Mr. Raj Ahuja was appointed as the Group Chief Financial November 19, 2018, citing that he was deeply concerned Officer and Key Managerial Personnel in terms of the about the recent developments at the Bank and dismayed

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provisions of Section 203 of the Companies Act, 2013 1. Audit Committee; w.e.f. April 3, 2018. 2. Risk Monitoring Committee; DECLARATION BY INDEPENDENT 3. Board Credit Committee; DIRECTORS 4. IT Strategy Committee; The Bank has received necessary declarations from each 5. Corporate Social Responsibility Committee; Independent Director under Section 149(6) and 149(7) of the Companies Act, 2013 and Regulation 16(1)(b) 6. Nomination and Remuneration Committee; and Regulation 25(8) of the SEBI (Listing Obligations and 7. Capital Raising Committee; Disclosure Requirements) Regulations, 2015 (‘Listing Regulations’), that they meet the criteria of independence 8. Stakeholders Relationship Committee; laid down thereunder. 9. Fraud Monitoring Committee; FAMILIARIZATION PROGRAMS FOR 10. Service Excellence, Branding and Marketing Committee INDEPENDENT DIRECTORS 11. Board Committee on Willful Defaulters & The various programs were undertaken for familiarizing Non-operative Borrowers; and the Independent Directors which are disclosed in detail 12. Committee of Independent Directors. in the Corporate Governance Report, which forms part of the Annual Report. The details with respect to the composition, NUMBER OF THE MEETINGS OF THE terms of reference, number of meetings held, etc. of these Committees are given in the report on Corporate BOARD AND COMMITTEES Governance which forms part of the Annual Report. Regular meetings of the Board and its Committees are held to discuss and decide on various business policies, CORPORATE SOCIAL RESPONSIBILITY strategies, financial matters and other businesses. The schedule of the Board/Committee meetings to be In compliance with Section 135 of the Companies Act, held in the forthcoming financial year is circulated to the 2013 read with the Companies (Corporate Social Directors in advance to enable them to plan their schedule Responsibility Policy) Rules, 2014, the Bank has for effective participation in the meetings. Due to business established Corporate Social Responsibility (‘CSR’) exigencies, the Board has also been approving several Committee and statutory disclosures with respect to the proposals by circulation from time to time. CSR Committee and an Annual Report on CSR Activities forms part of this Report as Annexure 1. The CSR Policy as The Board met thirteen (13) times during the FY recommended by the CSR Committee and as approved 2018-19 viz. on April 3, 2018, April 26, 2018, June 12, by Board is available on the website of the Bank 2018, June 13, 2018, July 26, 2018, August 28, 2018, and can be accessed at https://www.yesbank.in/pdf/ September 25, 2018, October 25, 2018, December 13, ybl_corporate_social_responsibility_policy. 2018, January 9, 2019, January 24, 2019, January 29, 2019 and March 14, 2019. PERFORMANCE EVALUATION OF Additionally, several Committee meetings were held THE BOARD during the year including Audit Committee and Risk The Bank has laid down criteria for performance Monitoring Committee Meetings, which met nine (9) and evaluation of the Directors including Chairman, MD & six (6) times respectively during the year. CEO, Board Level Committees and Board as a whole as well as the evaluation process for the same, in line Detailed information on the meetings of the Board and with the provisions of the Companies Act, 2013, Listing its Committees are included in the Report on Corporate Regulations and SEBI Guidance Note on the Board Governance, which forms part of the Annual Report. Evaluation dated January 5, 2017.

COMMITTEES OF THE BOARD The performance evaluation of the members of the Board, the Board Level Committees and Board as The Bank has the following twelve (12) Board level a whole was carried out on April 25 and 26, 2019. Committees which have been established in compliance Additional information on the Board Evaluation Process with the requirements of the business and relevant forms part of the Report on Corporate Governance. provisions of applicable laws and statutes:

Annual Report 2018-19 111 CORPORATE GOVERNANCE on the Corporate Governance which forms part of the Annual Report. Corporate Governance is an ethically driven business process that is committed to values aimed at enhancing an organization’s brand and reputation. This is ensured RISK MANAGEMENT FRAMEWORK by taking ethical business decisions and conducting The Bank’s Enterprise Risk Management framework business with a firm commitment to values, while encompasses the following: meeting stakeholders’ expectations. Further, Corporate Governance is based on the principles of conducting ▲▲ Risk Governance Framework: The Bank has the business with all integrity, fairness, and transparency implemented an Enterprise Risk Governance with all the transactions, making the necessary framework to ensure non-silo based management disclosures and decisions, complying with the laws and oversight of Risk. The Bank’s Risk Management of the land, accountability and responsibility towards philosophy is guided by the Three Lines of the stakeholders and commitment of conducting the Defence Principle: business in an ethical manner. Your Board functions as ▲▲ First Line of Defence – Business Management: trustees of the shareholders and seeks to ensure that the Each business segment of the Bank has risk long-term economic value for its shareholders is achieved ownership and is responsible for assessment while balancing the interest of all the stakeholders. and management of risks and has the The Bank is committed to achieve the highest overall responsibility of the management standards of Corporate Governance and also adheres and mitigation of the Risk. The segments are to the Corporate Governance requirements set by the required to implement appropriate procedures Regulators/applicable laws. In line with the foregoing, to fulfil their risk governance responsibilities. the Bank has adopted a Code of Corporate Governance which acts as a guide to the Bank and the Board on the ▲▲ Second Line of Defence – Independent best practices in the Corporate Governance. functions: The Bank’s independent oversight functions, such as, Risk Management, A separate section on Corporate Governance standards Compliance, Legal, Fraud Containment Unit, followed by the Bank and the relevant disclosures, as etc. set standards for management and stipulated under Listing Regulations, Companies Act, oversight of risks, including compliance with 2013 and rules made thereunder forms part of the applicable laws, regulatory requirements Annual Report. and policies. ▲▲ Risk Management: Risk Management A Certificate from M/s. Mehta & Mehta, Practicing establishes policies and guidelines Company Secretaries, conforming compliance by the for risk assessment and management Bank to the conditions of Corporate Governance as and contributes to controls and tools stipulated under Listing Regulations, is annexed to the to manage, measure and mitigate risks Report on Corporate Governance, which forms part of the faced by the Bank. Annual Report. ▲▲ Compliance: The Compliance unit MANAGEMENT DISCUSSION AND manages adherence to applicable laws ANALYSIS and regulatory guidelines. ▲▲ Legal: The Legal Risk Management The Management Discussion and Analysis Report for the division of the Bank undertakes various year under review as stipulated in Listing Regulations activities including advising business is presented in a separate section forming part of the and operational management, acting Annual Report. as an independent control function while facilitating business, ensuring VIGIL MECHANISM legal compliance, assisting the Board and Committees of the Board regarding In line with the provisions of Listing Regulations, the analysis of laws and regulations, Companies Act, 2013 and the principles of good regulatory matters, disclosure matters, governance, the Bank has devised and implemented a and potential risks and exposures on key vigil mechanism, in the form of 'Whistle-Blower Policy'. litigation and transactional matters. The policy devised is also aligned to the recommendations of Protected Disclosure Scheme for Private Sector and ▲▲ Finance: The Finance vertical provides Foreign Banks, instituted by RBI. Detailed information on key data and consultation to facilitate the Vigil Mechanism of the Bank is provided in the Report sound decisions in support of the

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objectives of the Bank and the business The Board has put in place five Board level Committees verticals. Finance serves as an which inter-alia pertain to Risk Management, viz. independent control function advising Risk Monitoring Committee (RMC), Audit Committee of business management and establishing the Board (ACB), Fraud Monitoring Committee (FMC), policies or processes to manage risk. It Board Committee on Wilful Defaulters & Non-Cooperative has overall responsibility for managing Borrowers (BCWD&NCB) and Board Credit Committee the Bank’s balance sheet and the Bank’s (BCC) to deal with risk management practices, policies, liquidity and interest rate risk. procedures and to have adequate oversight on the risks faced by the Bank. ▲▲ FCU & AML: The Fraud Containment Unit (FCU) is responsible for prevention and The Board Committees have set up various Executive detection of internal and external frauds level committees for oversight over specific risks. in the areas of Liabilities, Product and Support functions. The unit conducts 1. Management Credit Committee; transaction monitoring, forensic scrutiny, 2. Executive Credit Committee; employee awareness trainings and vulnerability assessments to help achieve 3. Retail and Business Banking Credit Committee; the said objective. The Anti Money 4. Model Assessment Committee; Laundering Unit (AML) is responsible for identifying and reporting of suspicious 5. Asset & Liability Management Committee; transactions as prescribed under PMLA 6. Investment & Financial Markets Management Act/Regulators, across all Business Committee; segments of the Bank. The AML unit is equipped with qualified, trained and 7. Operational Risk Management Committee; experienced staff, which monitors various 8. Outsourcing Management Committee; transactions undertaken by customers with a view to combat financial crimes 9. Business Continuity Management Committee; and prevents misuse of the accounts for 10. Security Council; money laundering. 11. Product Process Approval Committee; ▲▲ Third Line of Defence – Internal Audit: The Bank’s Internal Audit function independently 12. Fraud & Suspicious Transaction Monitoring reviews activities of the first two lines of Committee; defence based on a risk-based audit plan 13. Whistle-Blower Committee; and methodology approved by the Audit Committee of the Board. Internal Audit 14. Enterprise Risk Management & Capital Management provides independent assurance to the Board, Committee; the Audit Committee, senior management and 15. Strategy Management Committee; regulators regarding the effectiveness of the Bank’s governance and controls designed for 16. Reputation Risk Management Committee; risk mitigation framework. 17. Standing Committee on Customer Service; The Board of Directors of the Bank has overall responsibility 18. IT Steering Committee; for Risk Management. The Board oversees the Bank’s Risk 19. Steering Committee for IFRS (Ind AS); and related control environment, reviews and approves the policies designed as part of overseeing the Risk Management 20. RBS – Reporting Oversight Committee; practices. The Board ensures that comprehensive policies, 21. Apex Management Committee; systems and controls are in place to identify, monitor and manage material risks at a Bank-wide level, with clearly 22. Staff Accountability Committee; and defined risk limits. The Board has laid down a Risk Appetite 23. Committee for Classification of Wilful Deafulters; framework which articulates the quantum of risk the Bank is willing and able to assume in its exposures and business Risk events, potential threats, performance of the Bank activities in pursuit of its strategic objectives and desired vis-à-vis Risk Limits and Risk Appetite, Risk Profile returns. The Board has also established policies governing dashboard covering key risk indicators, etc. are presented risk management, such as, Enterprise Risk Management to these Committees, with Q-o-Q/Y-o-Y trends highlighted, Policy, Reputation Risk Management Policy, Group Risk with level and direction of risk. The Bank also conducts Management Policy, Credit Policy, ALM Policy, Model Risk & a detailed Internal Capital Adequacy Assessment Policy Governance Policy, etc. (‘ICAAP’) review exercise to identify its Risk universe, internal

Annual Report 2018-19 113 controls and mitigation measures in place for the risks and CONTRACTS OR ARRANGEMENTS capital requirements for identified risks. The ICAAP findings WITH RELATED PARTIES are presented to the RMC and the Board. There were no materially significant transactions with related parties including promoters, directors, key The Risk Management Unit is headed by the Chief Risk managerial personnel, subsidiaries or relatives of the Officer (‘CRO’) who leads the Credit Risk (Underwriting) Directors during the financial year which could lead to a Unit, General Legal Counsel and other Risk Units. The CRO potential conflict with the interest between the Bank and reports to the MD & CEO. The CRO is responsible to these parties. The details of the transactions with related ensure an effective implementation of an enterprise parties, if any, were placed before the Audit Committee wide risk management framework through various from time to time. There were no material individual risk policies, processes, limits and controls that enable transactions with related parties, which were not in prompt risk identification, accurate risk measurement the ordinary course of business of the Bank, nor were and effective risk mitigation. CRO is also responsible for there any transactions with related parties, which were risk compliance and monitoring as well as reviewing and not on arm’s length basis. Accordingly the disclosure in presenting various risk reports, policies and dashboards Form AOC-2 is not applicable to the Bank for the year to RMC and Board. under review. Suitable disclosure as required by the Accounting Standards (AS-18) has been made in the The Risk Management Unit in the Bank is designed to notes to the Financial Statements. establish an effective Enterprise Risk Management (ERM) framework for the Bank to ensure sustainable business Prior omnibus approval for normal banking transactions growth with stability and to promote a proactive approach is also obtained from the Audit Committee for the related in identification, assessment, management and reporting party transactions which are repetitive in nature as well of risks associated with business. The Risk Management as for the normal banking transactions which cannot be Unit enables the Bank to successfully meet its business foreseen and accordingly the required disclosures are and financial goals, while maintaining effective Board and made to the Committee for their approval. management oversight on Risk and Control parameters. ▲▲ Risk Appetite: The Bank’s Risk Appetite statement The policy on materiality of Related Party details the level of aggregate risk that the Bank is Transactions and also on dealing with Related willing to undertake and successfully manage in Party Transactions as approved by the Audit pursuit of its business goals. Committee and the Board of Directors is uploaded on the website of the Bank and can be accessed at ▲▲ Risk Management: The Bank follows a standardized https://www.yesbank.in/about-us/corporate-governance. methodology of identification and assessment of material risks, implementation of internal controls and mitigation measures, ongoing quality reporting CONSOLIDATED FINANCIAL and monitoring of risks. STATEMENTS ▲▲ Capital Management and Risk-based Capital Pursuant to Section 129(3) of the Companies Act, 2013, a allocation and performance measurement: The consolidated financial statement of the Bank along with its Bank ensures deployment of capital within the Subsidiaries i.e. YES Securities (India) Limited, YES Asset organization based on risk tolerance, economic Management (India) Limited and YES Trustee Limited has constraints, stakeholder needs and ensuring been prepared in the same form and manner as that of risk-based capital allocation and performance the Bank which shall be laid before the ensuing AGM measurement. along with the laying of the Bank’s Financial Statement under Section 129(2) i.e. Standalone Financial Statement LOANS, GUARANTEES OR of the Bank. INVESTMENTS IN SECURITIES Further, pursuant to the provisions of Accounting Pursuant to Section 186(11) of the Companies Act, 2013, Standard (AS-21), the Consolidated Financial Statements loans made, guarantees given or securities provided notified under Section 133 of the Companies Act, 2013, or acquisition of securities by a Banking company in read together with Rule 7 of the Companies (Accounts) the ordinary course of its business are exempted from Rules, 2014 issued by the Ministry of Corporate Affairs, disclosure requirements under Section 134(3) (g) of the the Consolidated Financial Statements of the Bank along Companies Act, 2013. with its subsidiaries for the year ended March 31, 2019 forms part of the Annual Report.

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INTERNAL FINANCIAL CONTROLS all assistance and facilities to the Secretarial SYSTEMS AND THEIR ADEQUACY Auditors for conducting their audit. The Report of Secretarial Auditors for the FY 2018-19 is The Bank has implemented adequate procedures and annexed to this report as Annexure 2. There are no internal controls which provide reasonable assurance observations, reservations or adverse remarks in regarding reliability of financial reporting and preparation the Secretarial Audit Report. of financial statements. The Bank also ensures that internal controls are operating effectively. BUSINESS RESPONSIBILITY REPORT AUDITORS As stipulated in Listing Regulations, the Business A. Statutory Auditors Responsibility Report describing the initiatives undertaken by the Bank from environmental, social and governance The Members of the Bank at the 12th Annual General perspective is attached as part of the Annual Report. Meeting held on June 7, 2016, have approved the appointment of M/s. B S R & Co. LLP, Chartered MATERIAL CHANGES AND Accountants as Statutory Auditors of the Bank for a period of four (4) years, subject to the approval of COMMITMENT AFFECTING the RBI, to hold office from the conclusion of the th12 FINANCIAL POSITION OF THE BANK AGM till the conclusion of 16th AGM of the Bank to There are no material changes and commitments, be held in the year 2020, subject to ratification of affecting the financial position of the Bank which has their appointment by the Members at every AGM. occurred between the end of the financial year of the Accordingly, RBI had approved the appointment of Bank i.e. March 31, 2019 and the date of the Directors’ M/s. B S R & Co., LLP as Statutory Auditors of the Report i.e. April 26, 2019. Bank for FY 2018-19, which was also ratified by the th Shareholders in the 14 AGM of the Bank held on SIGNIFICANT AND MATERIAL June 12, 2018. ORDERS PASSED BY REGULATORS Further, in terms of Companies (Amendment) Act, During the year under review, no significant and material 2017 notified w.e.f May 7, 2018, the requirement orders were passed by the regulators or courts or of Section 139(1) of Companies Act, 2013 stands tribunals impacting the going concern status and Bank’s omitted and the ratification of appointment of the operation in future. Statutory Auditor at every AGM is not required. The Bank has received the consent from the Auditors MAINTENANCE OF COST RECORDS and confirmation to the effect that they are not disqualified to be appointed as the Auditors of the Being a Banking Company, the Bank is not required to Bank in terms of the provisions of the Companies Act, maintain cost records as per sub-section (1) of Section 2013 and rules made thereunder. Accordingly, the 148 of the Companies Act, 2013. Board of Directors has recommended to RBI to seek its approval for appointment of M/s. B S R & Co. POLICY ON APPOINTMENT OF LLP, Chartered Accountants as Statutory Auditors of the Bank for FY 2019-20. DIRECTORS The Board of Directors of the Bank had formulated and The Report given by the Auditors on the financial adopted policy on “Board Diversity and Fit & Proper statements of the Bank forms part of this Annual Criteria and Succession Planning” for appointment of Report. There has been no qualification, reservation, Directors on the Board of the Bank and succession adverse remark or disclaimer given by the Auditors planning. The details of the same have been included in in their Report. Also, no offence of fraud was the Report on Corporate Governance forming part of this reported by the Auditors of the Bank. Annual Report.

B. Secretarial Auditors and Secretarial REMUNERATION POLICY Audit Report The Board of Directors of the Bank had formulated Pursuant to Section 204 of the Companies Act, 2013, and adopted policies for Remuneration of Employees the Bank had appointed M/s. BNP & Associates, of the Bank, Remuneration of Directors including the Practicing Company Secretaries, Mumbai as its Chairman of the Bank. The details of the same are made Secretarial Auditors to conduct the secretarial audit available on the Bank’s website and can be accessed at of the Bank for the FY 2018-19. The Bank provided https://www.yesbank.in/about-us/corporate-governance.

Annual Report 2018-19 115 EMPLOYEE REMUNERATION Green Masala Bond program that aimed at raising capital in the offshore rupee market. (a) The statement containing particulars of employees as required under Section 197(12) of the Companies ▲▲ December 2016: YES BANK has raised `3.30 billion, Act, 2013 read with Rule 5(3) of the Companies through an issue of a 7-year Green Infrastructure (Appointment and Remuneration of Managerial Bonds to FMO, the Dutch Development Bank, Personnel) Rules, 2014 forms part of this report. In on a private placement basis. This is FMO’s first terms of Section 136 of the Companies Act, 2013, Investment in a Green Bond issued by a bank in India. the same is open for inspection during working FMO has paid for placement using the proceeds hours at the Registered Office of the Bank. A copy of from their sustainability bonds issued in 2015. this statement may be obtained by the Members by The amount raised is used to finance Green Infrastructure writing to the Company Secretary of the Bank. Projects as per ‘Eligible Projects’ outlined in the Bank’s (b) The ratio of the remuneration of each Director internal guidelines that are in adherence to the Green and employees of the Bank as required under the Bond Principles (GBP). For FY 2018-19, KPMG, India provisions of Section 197(12) of the Companies has provided limited assurance on conformity of the Act, 2013 read with Rule 5(1) of the Companies use of proceeds, process for evaluation and selection of (Appointment and Remuneration of Managerial projects, management of proceeds and reporting of these Personnel) Rules, 2014, are forming part of this green bonds to GBP 2018. report as Annexure 3. The GBP are voluntary guidelines, developed by the ANNUAL RETURN International Capital Markets Association, for broad use by the market that recommend transparency and Pursuant to the provisions of Section 134(3)(a) and Section disclosure, and promote integrity in the development of 92(3) of the Companies Act, 2013 read with Rule 12 of the Green Bond market. They have the following four key the Companies (Management and Administration) Rules, components and the bank showcases its adoption below: 2014, the Annual Return of the Bank as at March 31, 2019 is uploaded on the website of the Bank and can be accessed at ▲▲ Use of Proceeds: The proceeds raised by the Bank https://www.yesbank.in/about-us/corporate-governance are used in eligible project categories and include all projects funded in whole, or in part, in the fields of DISCLOSURES UNDER GREEN INFRA renewable and clean energy projects including Wind, BONDS Solar, Biomass, Hydropower and other such projects. ▲▲ Process for Evaluation and Selection of Eligible Since the maiden issuance by YES BANK in 2015, Green Projects: The Bank’s process starts with interactions Bonds have emerged as an innovative instrument for with potential borrowers to understand the overall financing climate action in India. Over the past few years, aspects of the project and a preliminary confirmation the Green Bonds market has witnessed a steady growth and against the eligibility criteria. The evaluation moves is currently pegged at over USD 7 billion. Green Bonds are to risk assessment for confirmation of the eligibility, playing a pivotal role towards the realization of ambitious post which further documentation is sought as per climate targets that India pledged during Paris Accord in the Bank’s policies and GBP. 2015. Driven by its commitment of mobilizing USD 5 billion towards climate action by 2020, as taken during Paris ▲▲ Management of Proceeds: Green Bond allocations Accord, YES BANK has issued three green bonds: to eligible projects are tracked by the Bank through an MIS based asset tagging system on a quarterly ▲▲ February 2015: YES BANK issued India’s first-ever basis. The unallocated proceeds, if any, are placed Green Infrastructure Bonds, raising an amount of in liquid instruments (Government Securities) on a `10 billion. This 10 year tenor bond witnessed strong quarterly basis. demand from leading investors including Insurance companies, Pension & Provident Funds, Foreign ▲▲ Reporting: The Bank’s communication to investors Portfolio Investors, New Pension Schemes and through an annual update includes: Mutual Funds. ▲▲ List of projects to which proceeds have been ▲▲ August 2015: YES BANK raised `3.15 billion allocated to, with brief description including through the issue of Green Infrastructure Bonds amounts disbursed, installed capacity to International Finance Corporation on a private ▲▲ Summary of Environment and Social (E&S) placement basis which is the first investment by IFC impacts associated with projects, if any in an Emerging Markets Green Bond issue in the world. The bonds are for a tenor of 10 years. IFC paid ▲▲ Information on investment of unallocated for the placement using the proceeds from the first proceeds in liquid instruments.

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Impacts Through financing solar and wind power plants, these bonds strengthen India’s energy security while reducing fossil fuel dependency. These bonds have been crucial in financing climate change mitigation with avoidance of emissions of CO2, SO2, NOX and other air pollutants associated with fossil fuel based energy generation. Estimated CO2 emission reductions are shared along with project details. List of projects against which green bonds proceeds have been allocated as on March 31, 2019 is provided below: Proceeds Utilization* Against Bond Issuance Size of `1,000 crore (February 2015) Estimated** Total Fund Based positive E&S Known significant Sr. Utilization, ` crore Project Location Description impacts - CO negative E&S No. (as on 2 Emissions Reduc- Impacts March 31, 2018) tion (tCO2 / yr) 1. Maharashtra 31.5 MW wind energy project 121.32 45,756.09 None 2. Andhra Pradesh 10 MW solar energy project 18.61 18,183.66 None 3. Madhya Pradesh 12 MW wind energy project 38.48 28,595.27 None 4. Karnataka 50 MW solar energy project 94.44 92,588.38 None 5. Telangana 15 MW solar energy project 9.29 20,945.42 None 6. Telangana 143 MW solar energy project 189.74 2,90,199.61 None 7. Telangana 15 MW solar energy project 9.29 11,731.39 None 8. Telangana 42 MW solar energy project 11.42 73,189.22 None 9. Rajasthan & 155.4 MW wind energy project 231.20 2,55,734.57 None Andhra Pradesh 10. Karnataka 40 MW solar energy project 174.92 83,390.64 None 11. Karnataka 21 MW wind energy project 56.57 48,758.60 None 12. Karnataka 32 MW solar energy project 48.25 63,870.91 None

Proceeds Utilization* Against Bond Issuance Size of `315 crore (August 2015) Estimated** Total Fund Based positive E&S Known significant Sr. Utilization, `crore Project Location Description impacts - CO negative E&S No. (as on 2 Emissions Reduc- Impacts March 31, 2018) tion (tCO2 / yr) 1. Andhra Pradesh 100 MW wind energy project 141.92 2,83,508.64 None 2. Telangana 30 MW solar energy project 89.72 52,278.02 None 3. Telengana 5 MW solar energy project 22.63 9,625.44 None

Proceeds Utilization* Against Bond Issuance Size of `330 crore (December 2016) Estimated** Total Fund Based positive E&S Known significant Sr. Utilization, ` crore Project Location Description impacts - CO negative E&S No. (as on 2 Emissions Reduc- Impacts March 31, 2018) tion (tCO2 / yr) 1. Gujarat 30 MW wind energy project 40.87 68,677.52 None 2. Telangana 50 MW solar energy project 6.32 89,207.46 None 3. Karnataka 40 MW solar energy project 188.60 85,215.53 None 4 Rajasthan 300 MW solar energy project 111.85 4,52,391.80 None * For the Green Bonds which have been fully utilized, the cumulative lending to the projects which received the proceeds may exceed the issuance size. The temporary unallocated proceeds (`60.73 crore of `315 crore bond issued in August 2015) have been invested in Government Securities and will be allocated back to eligible projects, when available. The assurance statement issued by KPMG India is attached as Annexure 4 to this report. STATUTORY DISCLOSURES The disclosures required to be made under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 on the conservation of energy, technology absorption and Foreign exchange earnings and outgo are given as under: Annual Report 2018-19 117 A. Conservation of Energy continue its focus on technology. This will enable the Bank to build a more secure, resilient, and seamless I. The steps taken or impact on way of interacting and transacting for customers. It will Conservation of Energy: further enforce YES BANK’s endeavors to become a ▲▲ The Bank has been migrating to LED lighting technology-led company in the business of banking. in phases. In present financial year we have replaced 3,592 LED units, which has a potential During FY 2018-19, several new initiatives were for annual energy saving of 20775 KW. completed successfully, as well as systems were upgraded to latest versions to support the growing ▲▲ The Bank is in the process of phasing out needs of the Bank. The key Bank-wide projects air‑conditioning systems that use ozone completed during FY 2018-19 were: depleting coolants, and in the current reporting cycle, the Bank has initiated the process to ▲▲ Right Sourcing Strategy: YES BANK has replace all air conditioners that are more than successfully completed transitions of end user 10 years old with energy efficient (star rated) support system, IT infrastructure management systems that use eco-friendly coolants and and business applications maintenance, among thus reducing its environmental footprint, others from total outsourcing arrangements to which have potential saving of 10 to 15%. Right Sourcing operating model. This ensures retention of key technology talent and a ▲▲ The Bank is in the process of phasing out more efficient use of partners. The model signage’s using tube light with energy efficient further entails the use of an optimal mix of LED’s which have potential saving of 20 to insourcing and outsourcing of staff to support 25%. In FY 2018-19, it has been completed and maintain technology assets like business across 70 branches. applications and IT infrastructure. ▲▲ YES BANK’s energy management initiatives ▲▲ YES RAPIDO: A truly modern, state-of-the-art, aim at reducing 15-20% energy consumption lightweight workflow management solution by introducing Energy management system, having a front-end using Progressive Web wherein the consumption will be monitored Apps has been implemented by the Bank. centrally using IOT. YES Rapido leverages the power of Cloud technologies like Kubernetes and micro II. The steps taken by the Bank for utilizing services to make it one of the most agile alternate sources of Energy: and resilient technologies. This digital fabric The Bank has explored the potential of using solution will form a critical part of furthering alternate sources of energy by installing 5KVA solar digital transformation objectives of the Bank. system at Pune Bundh garden branch, which has a ▲▲ YES Genie: YES Genie leverages the Bank’s potential to generate 7,200 units annually. The Bank efforts to consolidate all its customer data would continue to explore alternative sources of (transactions, interactions, behavioral energy in future. attributes and so on) into the Big Data platform III. The Capital Investment on Energy (Hadoop) as its Enterprise Datawarehouse Conservation Equipments: technology. It is built using Modern Application Architecture (the state-of-the-art Microservice `4.25 crore spent in present financial year (including Mesh using Kubernetes, Google Istio and other AC retrofitting, LED projects at corporate offices and latest technologies). As part of the first phase, branch locations). YES Genie creates a single view of customers B. Technology Absorption across all banking relationships with the Bank. Besides, it allows a call-to-action enablement I. Efforts Toward Technology Absorption to assist in delivering services. The advancements in Information Technology (IT) ▲▲ YES Bank Datathon: This initiative was have led to accelerated development in newer launched with the objective of crowd sourcing technologies, resulting in higher demand for digital ideas and building an augmented data science solutions to create alternative banking products that team for the Bank. In the first edition, YES BANK deliver customer delight through a better service received an overwhelming response with over delivery framework. 6,000+ applications. The key outcomes of the YES BANK Datathon’s 1st edition were building Since inception, YES BANK has been at the forefront data model prototypes for the Next Best Action of technology innovation and adoption, and will model (predicting a next-best action of a

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customer/user), Anomaly Detection model for the-art security framework and using concepts POS terminals to ensure higher service levels of the Modern Technology architecture. and a Recommender model for relationship ▲▲ Unified Cash Management and Corporate managers to identify priority customers. Net-Banking Solution: A robust Core System ▲▲ API Banking: YES BANK has undertaken is critical to deliver a superior experience to tremendous strides to ensure a stronger all corporate customers of the Bank. The new connect with its customers and ensure a solution will enable a more seamless and seamless experience when transacting and/ straight-through processed environment for or making basic enquiries. Currently, it has customer transactions. This will also be scaled more than 850 customers on API Banking and up further to ensure it promptly address the this continues to grow at a healthy pace. This needs and expectations of customers and product offering is replicated across Enterprise growing business volumes. Technology Architecture and the ‘API first’ ▲▲ Extend Cloud-based Use cases: YES BANK philosophy is being imbibed by the Bank’s plans to use Cloud infrastructure extensively to technology team. ensure that the power of FutureTech is being ▲▲ Awards and accolades: YES BANK won leveraged across all levels of the Bank. multiple awards at the prestigious Indian ▲▲ Apollo Program for OSD Technology Banking Association Awards 2018-19. The Bank Transformation: With a vision to position was recognized with – Best use of customer- YES BANK as the most ‘Customer Centric’ centric technology solution – Winner and Best Bank in the services segment and focus on Technology Bank 2019– Runner Up, Best use the end-to-end Operation Service Delivery of Analytics for superior Customer experience (OSD) Technology Transformation with Digital – Runner Up. Solutions, Apollo Program will review, re- II. Proposed New Projects imagine and/or re-engineer every Business Operations Process, keeping customer at There is a healthy pipeline of exciting new initiatives, the forefront with the objective to ensure which will enable YES BANK to deliver world-class Efficiency, Productivity, Risk Management, and digital-first customer service in both assisted and Compliance. self-help mode. ▲▲ Rural Retail Banking: The Bank is building a ▲▲ Retail Net-Banking Upgrade: A completely comprehensive mobility platform to create a refreshed and revamped Retail Net-Banking paperless banking experience and become platform is expected to be launched in the preferred banker in rural and semi-urban FY 2019-20. It has been built using state-of- geographies.

III. In case of Imported Technology (imported during the last three years reckoned from the beginning of the financial year): Whether the If not fully absorbed, areas Details of Technology Imported Year of Import Technology been where absorption has not taken fully absorbed place, and the reasons thereof Software Tokens for Net Banking, Implementation fees Aug-14 Yes NA and delivery of Branded Software Tokens Enabling Radius licenses for 10,000 concurrent users Sep-15 Yes NA (SMS/E-mail, OATH, software tokens) on existing setup Master Data Management licenses Nov-15 Yes NA Cisco Wan Stack for Branch WAN Architecture Revamp Dec-16 Yes NA Upgradation of Murex 2.11 to Murex 3.1 Apr-17 Yes NA Cisco CUCM Dec-17 Yes NA Portwise Nexus Hybrid Access Gateway Oct-18 Yes NA Palo Alto Firewall Feb-19 Yes NA

C. Foreign Exchange Earnings and Outgo During the year ended March 31, 2019 the Bank earned `37,897.01 million and spent `17,396.41 The Foreign Exchange earned in terms of actual million in foreign currency. This does not include inflows during the year and the Foreign Exchange foreign currency cash flows in derivatives and outgo during the year in terms of actual outflows. foreign currency exchange transactions.

Annual Report 2018-19 119 COMPLIANCE WITH SECRETARIAL (b) the directors had selected such accounting policies STANDARDS and applied them consistently and made judgments and estimates that are reasonable and prudent so The Board of Directors affirm that the Bank has complied as to give a true and fair view of the state of affairs with the applicable Secretarial Standards issued by the of the Bank at the end of the financial year and of the Institute of Companies Secretaries of India (SS1 and profit of the Bank for that period; SS2) respectively relating to Meetings of the Board, its Committees and the General Meetings. (c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in PREVENTION OF SEXUAL accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Bank HARASSMENT OF WOMEN AT THE and for preventing and detecting fraud and other WORKPLACE irregularities; The Bank has Zero tolerance towards any act on the part (d) the directors had prepared the annual accounts on a of any executive which may fall under the ambit of ‘Sexual going concern basis; Harassment’ at workplace, and is fully committed to uphold and maintain the dignity of every women executive (e) the directors, had laid down internal financial working in the Bank. The Policy regarding Prevention controls to be followed by the Bank and that such & Prohibition of Sexual Harassment at Workplace internal financial controls are adequate and were provides for protection against sexual harassment of operating effectively; and women at workplace and for prevention and redressal of (f) the directors had devised proper systems to ensure complaints. Also, in its endeavor to spread awareness on compliance with the provisions of all applicable laws the aforementioned policy and ensure compliance by all and that such systems were adequate and operating the executives, the Bank has implemented a plan of action effectively. to disseminate the information and train the executives on the policy under the ambit of ‘Gender Respect and ACKNOWLEDGMENT Commitment to Equality’ (GRACE) program. Your Directors take this opportunity to express their deep The Bank has complied with provisions relating to the and sincere gratitude to the customers of the Bank for constitution of Internal Committee under the Sexual their confidence and patronage, as well as to the Reserve Harassment of Women at Workplace (Prevention, Bank of India, Securities and Exchange Board of India, Prohibition and Redressal) Act, 2013 (POSH). Government of India, and other Regulatory Authorities for Number of cases filed and their disposal under Section 22 their cooperation, support and guidance. Your Directors of the POSH is as follows: would like to express a deep sense of appreciation for the commitment shown by the employees in supporting Particulars Numbers the Bank in its continued robust performance on all fronts. Number of complaints pending as on the 1 th beginning of the financial year In the Bank’s 15 year of Institutional Excellence, the Number of complaints filed during the 10 Directors would also like to thank all our valued partners, financial year vendors and stakeholders who have played a significant Number of complaints pending as on the 2 role in the continued Business Excellence achieved end of the financial year by the Bank. Your Directors would also like to thank the employees for their continued support as the Bank DIRECTORS’ RESPONSIBILITY evolves as the “Professionals’ Bank of India” with a vision STATEMENT of “BUILDING INDIA’s FINEST QUALITY LARGE BANK OF THE WORLD IN INDIA”. Pursuant to the requirement under Section 134(5) of the Companies Act, 2013, it is hereby confirmed that: For and on behalf of the Board of Directors (a) in the preparation of the annual accounts, the Ravneet Singh Gill Brahm Dutt applicable accounting standards had been Managing Director & CEO Chairman followed along with proper explanation relating to (DIN: 00091746) (DIN: 05308908) material departures; Place: Mumbai Date: April 26, 2019

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Annexure 1 THE ANNUAL REPORT ON CORPORATE SOCIAL RESPONSIBILITY (CSR) ACTIVITIES A brief outline of the Bank’s CSR policy, including overview of projects or programs proposed to be undertaken:

YES BANK’S CSR POLICY: ▲▲ Livelihood and Water Security Through its Responsible Banking ethos, YES BANK has ▲▲ Employability and Entrepreneurship created stakeholder value by implementing projects based ▲▲ Environmental Sustainability on unique models with scalable and sustainable impact. Guided by its Corporate Social Responsibility (‘CSR’) policy, ▲▲ Media for Social Change the bank has delivered internal and external positive ▲▲ Awareness and educating communities on socio-environmental impact by following a unique approach. environmental and social topics of national importance APPROACH TOWARDS CSR: WEB-LINK TO THE CSR POLICY: ▲▲ Promote principles of social responsibility and https://www.yesbank.in/pdf/ybl_corporate_social_ inclusive growth through awareness and support. responsibility_policy ▲▲ Invest in socially and environmentally responsible activities to create positive impact. COMPOSITION OF CSR COMMITTEE: ▲▲ Engage with stakeholders to further the sustainability YES BANK recognizes its responsibility towards the society agenda of the bank and empower with knowledge. and environment in which it operates and accordingly ▲▲ Collaborate with likeminded institutions and forge has worked towards CSR and Sustainable Development partnerships towards addressing the needs of the focusing on the ‘Triple Bottom line’ ethos since its inception. stakeholders. YES BANK’s Corporate Social Responsibility Committee monitors the CSR activities on a periodic basis. ▲▲ Monitor the environmental and social investment of YES BANK Limited through structured governance Members of the committee as on March 31, 2019: and transparent performance indicators. 1. Mr. Maheswar Sahu (Chairman), Independent Director YES BANK’S FOCUS AREAS UNDER 2. Dr. Pratima Sheorey, Independent Director CSR: 3. Lt. General (Dr.) Mukesh Sabharwal (Retd.), 1. Livelihood security and enhancement Independent Director (a) Education 4. Mr. Ravneet Singh Gill, Managing Director & CEO (b) Skills/Employability training AVERAGE NET PROFIT BEFORE TAX 2. Healthcare and Social welfare OF THE BANK FOR LAST THREE 3. Environment Sustainability FINANCIAL YEARS: `4,779 crore 4. Arts/Sports and culture OVERVIEW OF ACTIVITIES: PRESCRIBED CSR EXPENDITURE In line with the CSR policy and in accordance of Schedule (TWO PER CENT OF THE AMOUNT AS VII of the Companies Act, 2013, YES BANK undertook ABOVE) unique initiatives during the year which positively `95.58 crore impacted lives. The initiatives for FY 2018-19 focused on scaling up projects that were launched over the last four DETAILS OF CSR SPENT DURING THE years with an objective to deliver on exponential impact and creating sustainable CSR models. FINANCIAL YEAR: (a) Total amount to be spent for the financial year: The key initiatives undertaken during the year were in-line `95.58 crore. with YBL’s CSR focus areas under umbrella program The Bank has spent `53.78 crore during #YES S.T.A.R.T (Sustainable Transformation through FY 2018-19. Alliances, Relationships and Technology) including: (b) Amount unspent, if any: `41.8 crore.

Annual Report 2018-19 121

Amount spent: Direct or through implementing agency Direct Ammada Trust YES Foundation National Skills Foundation of India Direct Foundation for MSME Clusters (FMC) Entrepreneurship Development Institute of India (EDII) Direct Deshpande Foundation Villgro Innovations Foundation Direct YES Foundation Direct crore

9.18 8.69 crore 47.01 crore 47.01 19.57 crore 19.57 12.29 crore 30.58 crore 30.58 58.56 crore 185.88 crore Cumulative Expenditure upto the Period Reporting 22 crore 3.16 crore 3.16 1.90 crore 4.83 crore 6.99 crore 2.50 crore 12.40 crore 53.78 crore 53.78 expenditure expenditure on projects or programs Amount spent on the projects or programs Subheads: (1) Direct (2) Overheads 7 crore 13 crore 12 crore 21 crore 22 crore 25 crore Amount outlay (budget) project or program- wise TOTAL

Rajasthan,

Haryana,

Gujarat,

Rajasthan Punjab,

Goa, Gujarat, Madhya Pradesh,

where projects or Programs was undertaken Local area or other Local and district Specify the State Projects or programs (1) (2)  Delhi/NCR, Karnataka, Maharashtra, Delhi/NCR, Madhya Pradesh, Karnataka, Maharashtra, West Nadu, Telangana, Tamil Bengal Pan India Pan India Pan India Pan India Pan education

Making available safe drinking water Livelihood enhancement Ensuring environment sustainability Promoting preventive healthcare Promoting education Promoting education Livelihood enhancement Ensuring environment sustainability Ensuring environment sustainability Promoting education Promoting education Livelihood enhancement Promoting preventive healthcare Ensuring environment sustainability Sector in which the project is covered • • • • • • • • • • • • • • • Promoting

CSR project or activity identified Livelihood and Security Water Say YES to Sustainable MSMEs in India YES STEADY YES STEADY (Skills Training and En- hancement for Development of Youth) Natural Capital Initiatives YES COMMUNITY Support to YES Foundation Expenditure on administrative over-heads Manner in which the amount spent during financial year is detailed below: Sr. Sr. No. 1 2 3 4 5 6 7 (c)

122 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

REASONS FOR NOT SPENDING delivering large scale impact. This year the Bank has spent PRESCRIBED CSR EXPENDITURE: `53.78 crore (1.13%) vis-a-vis budgeted `95.58 crore (2%), towards CSR as per Section 135 of the Companies, YES BANK, since inception has believed in creating Act, 2013. While the percentage is lower than stipulated sustained value for its stakeholders, through its 2%, the actual amount spent this fiscal is higher than Responsible Banking ethos, by contributing positively last year. The reason for lower spend, is on account of towards economic development and socio-environmental factors like milestone based project level disbursement to objectives, thus playing a larger role in India’s overall implementation partners, delays in permissions from local sustainable development. authorities and implementation schedule in this fiscal, inability of implementation partners to scale-up projects In FY 2018-19, with focus on impact & scale, the Bank and quality of proposals to undertake new projects. extensively worked on areas of national importance YES BANK is highly committed to India’s developmental like Livelihood & Water Security, Employability & agenda and over the next year, is determined towards Entrepreneurship, Environmental Sustainability and increasing its CSR impact, supplemented by its continued Social Transformation. During the year, the Bank provided focus on sustainable development and responsible access to safe and clean drinking water, to over 1 lakh banking. The Bank would explore additional projects to lives every day, across 330 railway stations, in partnership take into account any shortfall that may occur. with Indian Railways. This project, since FY 2015-16, has provided access to safe and clean drinking water, YES BANK stands committed to sustainable finance, which to nearly 10 crore lives covering 1,005 railway stations, it believes is the key to unlocking India’s potential and across Maharashtra, Gujarat, Madhya Pradesh, Rajasthan, achieving sustainable developmental goals. In-line with Goa and Karnataka. its COP 21 commitment, the Bank has been successful in mobilizing USD 5 billion from 2015 to 2019, towards Given the criticality of MSME sector to India’s low projects with positive environmental impact through carbon & sustainable economy, the Bank, since 2015, lending, investing and raising capital. The Bank continued extensively worked with 49,000 MSMEs, sensitizing on to work extensively on livelihood enhancement programs energy efficiency, circular economy, financial literacy and especially with women, and financial inclusion with occupational health & safety of its workers. The Bank’s migrants. While these interventions are beyond the ambit unique flagship community engagement initiative was of the definition of CSR under the Companies Act, 2013, instrumental in building awareness and educating it has supplemented the Bank’s objectives, in creating a communities on financial literacy, Swachh Bharat, larger and deeper socio-economic impact. environmental conservation and creation of a carbon sink, through tree plantations, touching 2 lakh lives through the The CSR Committee confirms that the implementation year. and monitoring of CSR Policy, is in compliance with CSR objectives and Policy of the Bank. As a public trust institution, being a responsible corporate citizen is a part of YES BANK’s core values. With prudence Ravneet Singh Gill Maheswar Sahu it has been undertaking and investing in CSR projects Managing Director & CEO Chairman – CSR Committee that are unique, scalable and sustainable, continuously (DIN: 00091746) (DIN: 00034051)

Annual Report 2018-19 123 Annexure 2 FORM NO. MR-3 Secretarial Audit Report For the financial year ended March 31, 2019

[Pursuant to Section 204(1) of the Companies Act, 2013 and Rule No.9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014]

To, (a) The Securities and Exchange Board of The Members, India (Substantial Acquisition of Shares and YES BANK Limited Takeovers) Regulations, 2011; YES Bank Tower, IFC – II, (b) The Securities and Exchange Board of India 15th Floor, Senapati Bapat Marg, (Prohibition of Insider Trading) Regulations, Elphinstone (W), 2015; Mumbai 400 013 (c) The Securities and Exchange Board of India We have conducted the Secretarial Audit of the (Share Based Employee Benefits) Regulations, compliance of applicable statutory provisions and the 2014; adherence to good corporate practices by YES BANK (d) The Securities and Exchange Board of Limited (hereinafter called the ‘Bank’) for the audit period India (Issue and Listing of Debt Securities) covering the financial year ended on March 31, 2019 Regulations, 2008; (the ‘audit period’). Secretarial Audit was conducted in a manner that provided us a reasonable basis for (e) The Securities and Exchange Board of India evaluating the corporate actions and practices/statutory (Registrars to an Issue and Share Transfer compliances and expressing our opinion thereon. Agents) Regulations, 1993 regarding the Act and dealing with client; Based on our verification of the Bank’s books, papers, (f) The Securities and Exchange Board of minute books, forms and returns filed and other records India (Listing Obligations and Disclosure maintained by the Bank and also the information Requirements) Regulations, 2015 (‘SEBI LODR’); provided by the Bank, its officers, agents and authorized representatives during the conduct of Secretarial Audit, 5. The following other laws as applicable specifically We hereby report that in our opinion, the Bank has, during to the Bank: the audit period covering the financial year ended on (a) The Banking Regulation Act, 1949 and March 31, 2019, complied with the statutory provisions Notifications and Circulars issued by the listed hereunder and also that the Bank has proper Reserve Bank of India (‘RBI’) from time to time Board-processes and compliance-mechanism in place (‘BR Act’); to the extent in the manner and subject to the reporting made hereinafter: (b) Securities and Exchange Board of India (Merchant Bankers) Regulation, 1992; We have examined the books, papers, minute books, (c) Securities and Exchange Board of India forms and returns filed and other records maintained by (Depositories and Participants) Regulations, the Bank for the financial year ended on March 31, 2019 1996; according to the provisions of: (d) Securities and Exchange Board of India 1. The Companies Act, 2013 (the ‘Act’) and the Rules (Bankers to an Issue) Regulations, 1994. made thereunder; We have also examined compliance with the applicable 2. The Securities Contracts (Regulation) Act, 1956 clauses of Secretarial Standards issued by The Institute (‘SCRA’) and the rules made thereunder; of Company Secretaries of India related to the Board 3. The Depositories Act, 1996 and the Regulations and meetings and General Meetings. Bye-laws framed thereunder; During the audit period, the Bank has complied with the 4. The following Regulations and Guidelines prescribed provisions of the Act, Rules, Regulations, Standards and under the Securities and Exchange Board of India Circulars as mentioned above. Act, 1992 (‘SEBI Act’): -

124 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

During the period under review, provisions of the Agenda were sent at least seven days in advance, following Act/Regulations though specified in the format and a system exists for seeking and obtaining further of Form No. MR-3, were not applicable to the Bank: information and clarifications on the agenda items before the meeting and for meaningful participation 1. The following Regulations and Guidelines prescribed at the meeting. under the SEBI Act:- ▲▲ Decisions at the meetings of the Board of Directors (a) The Securities and Exchange Board of India of the Bank (including the Board Level Committees), (Issue of Capital and Disclosure Requirements) and the resolutions approved through circulations, Regulations, 2009; were carried through on the basis of majority. There were no dissenting views by any member of the (b) The Securities and Exchange Board of India Board of Directors during the period under review. (Delisting of Equity Shares) Regulations, 2009; and We further report that there are adequate systems and (c) The Securities and Exchange Board of India processes in the Bank commensurate with the size and (Buyback of Securities) Regulations, 1998. operations of the Bank to monitor and ensure compliance with applicable laws, rules, regulations and guidelines. 2. Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder to the extent We further report that during the audit period: of Foreign Direct Investment, Overseas Direct Investment and External Commercial Borrowings. (a) The Bank has Allotted 1,20,65,794 (One Crore Twenty Lakh Sixty Five Thousand Seven Hundred We further report that - and Ninety Four) equity shares of face value of `2/- ▲▲ The Board of Directors of the Bank is duly constituted each under ESOP Schemes of the Bank. with proper balance of Executive Directors, Non- (b) The Bank has received final license from SEBI for Executive Directors and Independent Directors. The Custodian of Securities Business. changes in the composition of the Board of Directors that took place during the period under review were (c) The Bank has received certain Show Cause Notices carried out in compliance with the provisions of the from the Regulatory Authorities which have been Act, SEBI LODR and BR Act. placed before the Audit Committee and/or the Board of Directors of the Bank and suitable actions ▲▲ Adequate notice is given to all the Directors to have been taken by the Bank in compliance with the schedule the Board Meetings (including Board Level relevant Regulations. Committees), Agenda and detailed notes on the

(d) Pursuant to the approval granted by Reserve Bank of India, the Bank has exercised Call Option and redeemed following Bonds/Debentures as given below: Instrument Type Allotment Date Maturity Date Amount Tenor (Years) Call Option Date Tier I perpetual Bonds June 27, 2008 Perpetual $ 5 million Perpetual June 27, 2018 Upper Tier II Bonds June 27, 2008 June 27, 2023 $ 80 million 15 June 27, 2018 Upper Tier II Bonds September 15, 2008 September 15, 2023 `200 Crores 15 September 15, 2018 Tier I Perpetual Bond February 21, 2009 Perpetual `115 crores Perpetual February 21, 2019 Tier I Perpetual Bond March 9, 2009 Perpetual `39 crores Perpetual March 9, 2019

(e) The Bank has received SEBI approval to launch borrowed out of the Bank’s IFSC Banking Unit (IBU) Mutual fund business dated July 4, 2018. This in Gujarat International Finance Tec City (GIFT) approval is subsequent to the Reserve Bank of and will be utilized to support the IBU’s growing India’s approval granted to YES BANK to sponsor a business. Mutual Fund followed by SEBI’s in-principle approval (g) The Capital Raising Committee of the Board of received subsequently. the Bank (“CRC”) on September 11, 2018, has (f) The Bank has raised USD 400 million through approved the issue of rated, listed , non-convertible, syndicated loan facility dated September 11, 2018, redeemable, unsecured, BASEL III compliant Tier II

Annual Report 2018-19 125 Bonds, in the nature of debentures (“Debentures”), (m) The Bank has sold 12,337,323 equity shares having of `10,00,000 each aggregating upto `3,000 crore nominal value of `10/- each constituting 2.1279% with Green Shoe Option of upto `1,000 crore. Out of the paid up share capital of Fortis Healthcare of that 30,420 Debentures of `10,00,000 each Limited, in various tranches last being on December aggregating to `3,042 crore were issued and 18, 2018 resulting into a change in holding of the allotted by the CRC on September 17, 2018, on Bank by more than 2% of the total shareholding private placement basis. of FHL, from last disclosure made by the Bank on March 15, 2018. (h) The Bank has changed its registered office from 9th floor, Nehru Centre, Discovery of India, Dr. Annie (n) The Bank on January 3, 2019 has sold 29,28,504 Besant Road, Worli, Mumbai - 400 018 to YES equity shares of Valecha Engineering Limited having BANK Tower, IFC-II, 15th floor, Senapati Bapat Marg, nominal value of `10/- each, constituting 12.99824% Elphinstone (W), Mumbai - 400 013. of the paid up share capital of VEL, resulting into a change in holding of the Bank by more than 2% of (i) The Bank on November 14, 2018 has acquired total shareholding of VEL, from the last disclosure 29,28,504 equity shares, constituting 12.99% of made by the Bank on November 14, 2018. Post sale the paid up share capital, having nominal value of above mentioned shares in VEL stands NIL as on of `10/- per share of Valecha Engineering Ltd, January 3, 2019. pursuant to invocation of pledge on the said equity shares subsequent to default by promoters group (o) The Bank on January 3, 2019 has sold 2,30,655 companies in credit facility provided by Bank. equity shares constituting 30.00% of the paid up share capital, having nominal value of `100/- per (j) The Bank on November 14, 2018 has acquired share of Valecha Investment Pvt Ltd, which were 2,30,655 equity shares constituting 30.00% of acquired by way of invocation of pledge by the the paid up share capital, having nominal value Bank. Post sale of above mentioned shares in VIPL of `100/- per share of Valecha Engineering Ltd, stands NIL as on January 3, 2019. pursuant to invocation of pledge on the said equity shares subsequent to default by promoters group (p) RBI under Section 47A of the Banking Regulation companies in credit facility provided by Bank. Act, 1949 has levied aggregate penalty of `10 million on Bank for non-compliance of Regulatory directions (k) Name of Registrar and Transfer Agent of the Bank observed during assessment of implementation has been changed from ‘Karvy Computershare of SWIFT – related operational controls dated Private Limited’ to ‘Karvy Fintech Private Limited’ March 5, 2019. with effect from November 17, 2018. (q) The unclaimed dividend amount due to be (l) The Bank on November 27, 2018 has acquired transferred to the Investor Education and Protection 4,591,123 equity shares resulting in aggregating Fund (IEPF) during the year ended March 31, 2019 holding of 4,655,884 equity shares (including has been transferred without any delay. initial holding of 64,761 equity shares of Dion Global Solutions Limited held by YES Bank before For BNP & Associates acquisition of 4,591,123 equity shares) constituting Company Secretaries 14.446971 % of the paid up share capital, having nominal value of `10 per share of Dion Global B. Narasimhan Solutions Limited, pursuant to invocation of pledge Partner on the said equity shares subsequent to default by FCS 1303 /CP No. 10440 Dion Global Solutions Ltd. In repayment of credit Place: Mumbai facilities sanctioned by Bank. Date: April 26, 2019

126 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

ANNEXURE I TO THE SECRETARIAL AUDIT REPORT FOR THE FINANCIAL YEAR ENDED MARCH 31, 2019

To, The Members, YES Bank Limited

Our Secretarial Audit Report of even date is to be read along with this letter.

1. The compliance of provisions of all laws, rules, regulations, standards applicable to YES BANK Limited (the ‘Bank’) is the responsibility of the management of the Bank. Our examination was limited to the verification of records and procedures on test check basis for the purpose of issue of the Secretarial Audit Report. 2. Maintenance of secretarial and other records of applicable laws is the responsibility of the management of the Bank. Our responsibility is to issue Secretarial Audit Report, based on the audit of the relevant records maintained and furnished to us by the Bank, along with explanations where so required. 3. We have followed the audit practices and processes as were appropriate to obtain reasonable assurance about the correctness of the contents of the secretarial and other legal records, legal compliance mechanism and corporate conduct. The verification was done on test check basis to ensure that correct facts as reflected in secretarial and other records produced to us. We believe that the processes and practices we followed, provides a reasonable basis for our opinion for the purpose of issue of the Secretarial Audit Report. 4. We have not verified the correctness and appropriateness of financial records and Books of Accounts of the Bank. 5. Wherever required, we have obtained the management representation about the compliance of laws, rules and regulations and major events during the audit period. 6. The Secretarial Audit Report is neither an assurance as to the future viability of the Bank nor of the efficacy or effectiveness with which the management has conducted the affairs of the Bank.

For BNP & Associates Company Secretaries

B. Narasimhan Partner FCS 1303 /CP No. 10440 Place: Mumbai Date: April 26, 2019

Annual Report 2018-19 127 Annexure 3 The ratio of the remuneration of each director to the median employee’s remuneration and other details in terms of sub-section 12 of Section 197 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:

Sr. Requirements Disclosure No. I. The ratio of the remuneration of each director to the median Ashok Chawla 2.4x remuneration of the employees for the financial year Ex-MD & CEO – Rana Kapoor 82.8x Brahm Dutt 0.9x Interim MD & CEO – Ajai Kumar 1.9x MD & CEO – Ravneet Singh Gill 7.6x II. The percentage increase in remuneration of each Director, CFO, Ex-MD & CEO – Rana Kapoor 21.2% CEO, CS in the financial year MD & CEO – Ravneet Singh Gill - Interim MD & CEO – Ajai Kumar - CFO - CS 30.9% Ashok Chawla - Brahm Dutt - Notes: 1. Mr. Rana Kapoor demitted the office as MD & CEO w.e.f. the close of business hours on January 31, 2019 2. Mr. Ajai Kumar was appointed as Interim MD & CEO w.e.f. February 1, 2019 to February 28, 2019. 3. Mr. Ravneet Singh Gill took charge as MD & CEO w.e.f. March 1, 2019. 4. Mr. Ashok Chawla resigned w.e.f. November 14, 2018. 5. Mr. Brahm Dutt was appointed as Part-Time Chairman w.e.f. January 11, 2019. III. The percentage increase in the median remuneration of The median remuneration of the employees employees in the financial year in the financial year was increased by 12.00%. The calculation of % Increase in Median Re‑muneration is done based on comparable em-ployees. For this we have excluded employees who were not eligible for any increment. IV. The number of permanent employees on the rolls of the Bank There were 21,136 employees as on March 31, 2019 V. Average percentile increase already made in the salaries of Not Applicable to the Bank, as all the employees other than the managerial personnel in the last employees are considered under Managerial financial year and its comparison with the percentile increase in role. the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration VI. Affirmation that the remuneration is as per the remuneration Yes, it is confirmed policy of the Bank

General Notes (GN): 1. Remuneration in case of MD & CEO is regulated by RBI guidelines. 2. The Remuneration for the purpose of this table is defined as “Total Cost to the Company (TCC) + Approved Bonus” for all the employees except for KMPs. KMPs remuneration is as per the Form 16 (on an annualized basis) excluding stock option exercised since it does not form part of TCC.

128 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

Annexure 4 INDEPENDENT ASSURANCE STATEMENT

To the management of Yes Bank Limited, Yes Bank Tower, ▲▲ Determine which, if any, recommendations should IFC-2, 15th Floor, Senapati Bapat Marg, Elphistone (W), be implemented Mumbai - 400 013, Maharashtra, India. ▲▲ Provide assurance on information outside the defined reporting boundary and period Introduction ▲▲ Verify the Issuer’s financial statements & economic We were engaged by Yes Bank Limited (‘Issuer’) to performance undertake an independent review of the following green ▲▲ Verify the Issuer’s statements that describe bonds: expression of opinion, belief, aspiration, expectation, ▲▲ Green bonds for `1,000 crores issued on aim or future intention and national or global socio- February 24, 2015 economic and environmental aspects provided by the Issuer. ▲▲ Green bonds for `315 crores issued on August 5, 2015 Work undertaken ▲▲ Green bonds for `330 crores issued on December 29, 2016 We planned and performed our work to obtain all the evidence, information and explanations that Our responsibility was to provide “limited assurance” we considered necessary to obtain a meaningful on conformance of the aforementioned green bonds level of assurance in relation to the above scope. and the accompanying report “Disclosures under Green The procedures we performed, which are set out in Infrastructure Bonds for FY 2018-19” with the Green detail below, were based on our professional judgment Bond Principles, 2018 during the Financial Year (FY) and included, as appropriate, inquiries, observation 2018-19. of processes performed, inspection of documents, analytical procedures, evaluating the appropriateness Assurance Standards of quantification methods and reporting policies and agreement or reconciliation with underlying records. We conducted our engagement in accordance with We believe that the procedures we have performed requirements of ‘Limited Assurance’ as per International and the evidence we have obtained are sufficient and Federation of Accountants’ (IFAC) International Standard appropriate to provide a basis for our limited assurance on Assurance Engagements [ISAE 3000 (Revised), conclusion. Assurance Engagements Other than Audits or Reviews of Historical Financial Information]. To reach our conclusion we: Assurance scope and level of assurance ▲▲ Checked the Issuer’s Green Bond Framework that includes processes, systems and controls in place Our scope of assurance included information on material for management of bond proceeds; investment aspects of the green bond during FY 2018-19 based on areas for green bond proceeds and intended the requirements of the Green Bond Principles, 2018 as types of temporary investment instruments for the listed below: management of unallocated proceeds; ▲▲ Use of Proceeds ▲▲ Read sections of the bond disclosure documentation ▲▲ Process for Project Evaluation and Selection that also support the objects of the green bond issue, investment areas for proceeds and intended ▲▲ Management of Proceeds types of temporary investment instruments for the ▲▲ Reporting management of unallocated proceeds; ▲▲ Conducted interviews with management and key Specific limitations and exclusions staff responsible for the green bond to understand how the processes, systems and controls defined in Our assurance process was subject to the following the Green Bond Framework have been implemented limitations as we have not been engaged to: in the financial year;

Annual Report 2018-19 129 ▲▲ Checked the list of projects to which bond proceeds applicable independence and other ethical requirements have been allocated in the financial year and their of the IESBA code. conformance with the criteria defined in the Green Bond Framework; Management’s responsibility ▲▲ Confirmed the amount of bond proceeds allocated The Management of the Issuer is responsible for ensuring to projects at the end of each quarter in the financial that the Issuer and their green bond complies with the year through examination of a sample set of requirements of the Green Bond Principles, 2018. statements of accounts; This responsibility includes designing, implementing ▲▲ Confirmed the allocation of unallocated bond and maintaining systems and processes relevant for the proceeds to government securities at the end of each management of green bond proceeds. quarter in the financial year through examination of statements from Financial Management team of the The Management of the Issuer is also responsible for Issuer; and preventing and detecting fraud and for identifying and ensuring that Issuer complies with laws and regulations ▲▲ Recalculated estimated carbon dioxide emission applicable to its activities. reductions from projects using information collected by the Issuer. Our responsibility Conclusions Our responsibility is to report in the form of an independent limited assurance conclusion in relation to the above The following conclusion is based on the work performed scope based on the procedures performed and the and evidence obtained and the scope of our assurance evidence obtained. We conducted our engagement with engagement described above. a multidisciplinary team which included professionals with suitable skills and experience in auditing environmental, Nothing has come to our attention to suggest that the social and economic information in line with the green bonds issued in February 2015, August 2015 and requirements of ISAE 3000 standard. December 2016 by the Issuer and the accompanying report “Disclosures under Green Infrastructure Bonds for This assurance report is made solely to Issuer in FY 2018-19” are not, in all material respects, conforming accordance with the terms of our engagement, which to the requirements of the Green Bond Principles, 2018, include agreed arrangements for disclosure. Our work during FY 2018-19. has been undertaken so that we might state to Issuer those matters we have been engaged to state in this Independence assurance report and for no other purpose. Our assurance report should not be regarded as suitable to be used or The assurance was conducted by a multidisciplinary team relied on by any party wishing to acquire rights against including professionals with suitable skills and experience us other than Issuer for any purpose or in any context. in auditing environmental, social and economic Any party other than Issuer who obtains access to our information in line with the requirements of ISAE 3000 assurance report or a copy thereof and chooses to rely on standard. Our work was performed in compliance with the our assurance report (or any part thereof) will do so at its requirements of the IFAC Code of Ethics for Professional own risk. To the fullest extent permitted by law, we accept Accountants, which requires, among other requirements, or assume no responsibility and deny any liability to any that the members of the assurance team (practitioners) party other than Issuer for our work, for this independent as well as the assurance firm (assurance provider) be limited assurance report, or for the conclusions we independent of the assurance client, in relation to the have reached. scope of this assurance engagement. The Code also includes detailed requirements for practitioners regarding integrity, objectivity, professional competence and due Manpreet Singh care, confidentiality and professional behaviour. We have Director systems and processes in place to monitor compliance KPMG India with the Code and to prevent conflicts regarding Date: April 10, 2019 independence. We apply ISQC 1 and comply with the

130 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

Report on Corporate Governance (The Report on Corporate Governance forms part of the Directors’ Report for the year ended March 31, 2019)

I BANK’S PHILOSOPHY ON Governance practices and oversees how the CODE OF GOVERNANCE Management serves and protects the long-term interests of the stakeholders. YES BANK is committed to set the highest standards of Corporate Governance right from its inception and YES BANK’s Corporate Governance framework has benchmarked with the best in class practices ensures that timely disclosures are made and across the globe. Effective Corporate Governance is accurate information is shared regarding the the manifestation of professional beliefs and values, financials and performance, as well as the leadership which configures the organizational values, credo and governance of the Bank. and actions of its employees. Transparency and accountability are the fundamental principles to Environmental, Social & Governance sound Corporate Governance, which ensures that the organization is managed and monitored in a Rating responsible manner for ‘creating and sharing value’. Corporate Governance is emerged as an It is a key element to carry on business operations essential tool in the organizational management based on the underlying principles of integrity, globally. Strong Corporate Governance practices ethics, transparency and accountability. Over the have become crucial in achieving competitive last few decades, Corporate Governance is getting advantage and positively impacting profitability. ever increasing importance across the globe. YES BANK endeavors to benchmark itself with the Systems and policies are required to be upgraded best of companies in India and globally, to maintain regularly, to meet the challenges of rapid growth in the highest ratings for its Environmental, Social a dynamic business environment. and Governance (ESG) practices. We are pleased to advise you that in FY 2018-19, YES BANK YES BANK believes that there is a need to became the only Indian Bank to be awarded with view Corporate Governance as more than ‘PRIME’ status by OEKOM Research AG. With this just regulatory requirements as there exists a recognition, YES BANK stands amongst the top fundamental link with the organization of business, 12% of 249 Global financial institutions assessed on corporate responsibility and shareholder’s wealth ESG performance. maximization. Therefore, the Bank is articulating a multi-stakeholder model (including shareholder YES BANK continued to be the first and only Indian value) of accountability that will manage the symbolic Bank to be selected as an index component on relationship between the various stakeholders. the Dow Jones Sustainability Indices (DJSI) – This approach will be central to the day-to-day Emerging Markets Index, for the fourth consecutive functioning of the Bank and in implementation of its year. The Emerging Markets Index for 2018 business strategy. comprises of 94 companies from 14 emerging economies, which were selected after a rigorous As part of the Bank’s objective and commitment assessment of world’s largest 3,500 companies to implement best practices in Corporate on around 600 data points. YES BANK is the only Governance, it is felt necessary to codify these Indian Bank, among 50 global banks, to be included Governance Practices of the Bank by framing in DJSI family. the ‘Code for Corporate Governance’ as another milestone towards its endeavor for achieving higher YES BANK also became the first & only Indian Bank governance standards. Accordingly, the Board has to be included in the RobecoSAM-DJSI Sustainability adopted the ‘Code for Corporate Governance’. Yearbook’s 2018 edition, which indicates that YES BANK’s ESG performance is within 30% of YES BANK believes that an active, well-informed the top performing companies in the banking and independent Board is necessary to ensure sector globally. highest standards of Corporate Governance. It is well-recognized that an effective Board is a The Bank was also selected in the FTSE4Good pre-requisite for a strong and effective Corporate Emerging Index for 2nd consecutive year. Governance. At YES BANK, the Board of Directors The selection highlights YES BANK’s continued (the ‘Board’) is at the core of the Corporate leadership in ESG performance. YES BANK was

Annual Report 2018-19 131 rated above the threshold for companies in emerging Appointment of Directors markets, as well as that of developed markets, by 1. Mr. Subhash Chander Kalia was inducted on the FTSE Russell and was selected amongst 87 Banks Board as Additional (Non-Executive Non-Independent) from emerging markets. Director w.e.f. April 3, 2018, who was appointed as Non- Executive Non-Independent Director by the shareholders During FY 2018-19, YES BANK became the only at the 14th Annual General Meeting (AGM) of the Bank Indian Bank to be included in the 100 most advanced held on June 12, 2018. companies in VigeoEiris Best Emerging Markets performer. The Bank was selected after a rigorous 2. Dr. Pratima Sheorey and Mr. Rentala Chandrashekhar assessment of 813 companies across 20 countries. were inducted on the Board as Additional Directors (Independent) w.e.f. April 26, 2018, who were appointed YES BANK has closely aligned its Corporate as Independent Directors by the shareholders at the Governance practices with shareholders’ interests, 14th AGM of the Bank held on June 12, 2018. undertaking in-depth reporting and disclosures on all 3. Mr. Uttam Prakash Agarwal was inducted on the Board key aspects of the business. The Bank is a benchmark as Additional Director (Independent) w.e.f. November institution for Triple Bottom Line accounting and 14, 2018, subject to the approval of the shareholders in reporting in India in FY 2018-19, and continues to the ensuing AGM. adhere to GRI standards and Integrated Reporting guidelines of the International Integrated Reporting 4. Mr. Thai Salas Vijayan was inducted on the Board as Council. YES BANK follows international standard Additional Director (Independent) w.e.f. December 3, and best practices and has been successfully 2018, subject to the approval of the shareholders in the certified for ISO 27001/2013 certification for its ensuing AGM. Information Security Management System. 5. Mr. Maheswar Sahu and Mr. Anil Jaggia were inducted on the Board as Additional Directors (Independent) II BOARD OF DIRECTORS w.e.f. January 24, 2019, subject to the approval of the shareholders in the ensuing AGM. The composition of Board of Directors of the Bank is governed by the relevant provisions of the Banking 6. Mr. Brahm Dutt, Non-Executive Independent Director, Regulation Act, 1949, the Companies Act, 2013 and was appointed as ‘Part-Time Chairman’ of the Bank rules made thereunder, Securities and Exchange w.e.f January 11, 2019, pursuant to the approvals received Board of India (Listing Obligations and Disclosure from RBI and will hold office till January 10, 2022. Requirements) Regulations, 2015 (‘Listing 7. Mr. Ajai Kumar, Non-Executive Non-Independent Director, Regulations’), the Articles of Association of the Bank was appointed as ‘Interim MD & CEO’ of the Bank and all other applicable laws and in accordance for the period from February 1, 2019 to February 28, with the best practices in Corporate Governance 2019 and thereafter continued as Non-Executive Non- from time to time. Independent Director of the Bank.

The Corporate Governance philosophy of the 8. The Board of Directors of the Bank on January 24, Bank establishes that the Board’s independence is 2019, basis recommendations of the Nomination & essential to bring objectivity and transparency in the Remuneration Committee appointed Mr. Ravneet Management and in the dealings of the Bank. Singh Gill as an Additional Director effective from the date of his taking charge and to hold office up to the As on March 31, 2019, the Board of Directors date of this AGM. In the said meeting, the Board also comprised of 10 Directors, 1 Non-Executive appointed Mr. Gill as the Managing Director and Chief Independent Part-Time Chairman, 6 Independent Executive Officer (MD & CEO) of the Bank for the period Directors, 2 Non-Executive Non-Independent of three (3) years commencing from the date of his Directors and 1 Managing Director & Chief Executive taking charge as MD & CEO, on the terms & conditions Officer (MD & CEO). The Bank has eminent persons as approved by the RBI and as may be further decided from diverse fields as Directors on its Board. by the Board of Directors, from time to time, subject to The composition of Board of Directors represents necessary sanctions and approvals from the RBI and the optimal mix of professionalism, qualification, the Shareholders of the Bank, as may be applicable. knowledge, skill sets, track record, integrity, Mr. Gill took charge as MD & CEO of the Bank w.e.f. expertise and diversity of experience as required March 1, 2019. in the Banking Business. The Board reviews its 9. Mr. Ravinder Kumar Khanna has been inducted on the strength and combination from time to time to Board as Additional (Non-Executive Non‑Independent), ensure that it remains aligned with the statutory as Indian Partners Representative Director w.e.f. April 26, well as business requirements.

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2019, subject to the approval of the shareholders in the 5. Mr. Rentala Chandrashekhar, Non-Executive ensuing AGM. Independent Director of the Bank resigned w.e.f. November 19, 2018, citing that he was deeply 10. Ms. Shagun Kapur Gogia has been inducted on the concerned about the recent developments at the Bank Board as Additional (Non-Executive Non-Independent), and dismayed at the manner in which they have been Indian Partners Representative Director w.e.f. April 26, dealt with and it is more distressing that all this should 2019, subject to the approval of the shareholders in the have been occurred during a critical transition period ensuing AGM. when tact, wisdom and purposeful, well-considered actions were called for and the resulting situation Re-appointment of the Directors arising from recent development and their handling is not conducive to the discharge of his duties. 1. Mr. Subhash Chander Kalia, Non-Executive Non‑Independent Director, being liable to retire 6. Mr. Rana Kapoor demitted the office as MD & CEO of by rotation, shall retire at the ensuing AGM and the Bank w.e.f. close of business hours on January 31, being eligible for re-appointment, offers himself for 2019 upon completion of his term pursuant to RBI’s letter re‑appointment. dated September 17, 2018.

2. Lt. Gen. (Dr.) Mukesh Sabharwal (Retd.), Non‑Executive None of the Directors of the Bank are related to each other. Independent Director, will complete his first term as an Independent Director on June 13, 2019 and is eligible for List of Core Skills/ Experience/ re-appointment as an Independent Director of the Bank for the second term upto April 24, 2020 (i.e. completion Competencies Identified by the Board of eight years in the Bank as permissible under Banking The Board of Directors have identified the following Regulation Act, 1949), or such other extended term as Core Skills/ Practical Experience/ Special Knowledge/ may be approved by RBI. Competencies as required in the context of its business(es) and sector(s) for it to function effectively. The same 3. Mr. Brahm Dutt, Non-Executive Independent Director, are in line with the relevant provisions of the Banking will complete his first term as an Independent Director Regulation Act, 1949 and relevant circulars issued by RBI on June 13, 2019 and is eligible for re-appointment as an from time to time: Independent Director of the Bank for the second term upto January 10, 2022. 1. Accountancy; Retirement/Cessation of Directors 2. Agriculture and Rural Economy; 3. Banking; 1. In terms of RBI letter dated January 28, 2016 & March 28, 2018, Mr. Saurabh Srivastava completed his tenure 4. Co-operation; as a Non-Executive Independent Director of the Bank 5. Economics; w.e.f. close of business hours on April 22, 2018. 6. Finance; 2. Ms. Debjani Ghosh, Non-Executive Independent Director has resigned from the office of the Director 7. Law; on April 26, 2018, due to her pre‑occupation with full 8. Small-Scale Industry; time engagement as President of National Association of Software and Services Companies (NASSCOM). 9. Information Technology;

3. Mr. Ashok Chawla, Non-Executive (Independent) 10. Payment & Settlement Systems; Part‑Time Chairman of the Bank resigned w.e.f. 11. Business Management; November 14, 2018, mentioning that during the current transition period, the Bank would need a Chairman who 12. Risk Management; could devote more time and attention. 13. Human Resources; and 4. Mr. Vasant Gujarathi, Non-Executive Independent 14. Any other matter the special knowledge of, Director of the Bank resigned w.e.f. close of and practical experience in, which would, in the business hours on November 14, 2018, due to opinion of the Reserve Bank, be useful to the personal commitments. banking company.

Annual Report 2018-19 133 Composition of the Board of Directors The Composition of the Board of Directors of the Bank as on March 31, 2019, including skill sets/ expertise/ competencies/ practical knowledge and list & category of Directorship in other listed companies are as follows:

Sr. Name of the Director Category Special Knowledge/ Practical List and Category No. Experience/ Skills/ Expertise/ of Directorship Competencies in other Listed Companies

1. Mr. Ravneet Singh Gill MD & CEO ▲▲ Banking – Credit, Risk Management, Nil Foreign Exchange, Trade Finance, Investment Banking and Structured Finance 2. Mr. Brahm Dutt Non-Executive ▲▲ Small Scale Industry; and Nil (Independent) Part-Time ▲▲ Infrastructure Chairman 3. Lt. Gen. (Dr.) Mukesh Non-Executive Nil ▲▲ Human Resources; Sabharwal (Retd.) Independent Director ▲▲ Business Strategy; and ▲▲ Security Systems 4. Mr. Ajai Kumar Non-Executive ▲▲ Banking; Nil Non‑Independent Director ▲▲ Risk Management; ▲▲ Information Technology; ▲▲ Finance; ▲▲ Agriculture; ▲▲ Human Resources; ▲▲ Investments; ▲▲ Treasury Operations; ▲▲ Business Management; and ▲▲ Payment & Settlement Systems 5. Mr. Subhash Non-Executive ▲▲ Risk Management; Nil Chander Kalia Non‑Independent Director ▲▲ Banking; ▲▲ Micro & Small Enterprise Finance; ▲▲ Priority Sector Lending; ▲▲ Credit Recovery; ▲▲ Infrastructure; ▲▲ Agriculture lending; ▲▲ Rural economy; and ▲▲ Business Management

6. Dr. Pratima Sheorey Non-Executive ▲▲ Marketing; Nil Independent Director ▲▲ Business Strategy; ▲▲ Human Resources; and ▲▲ Business Management 7. Mr. Uttam Prakash Additional Director ▲▲ Accountancy; Globe International Agarwal (Independent) ▲▲ Finance; Carriers Limited ▲▲ Corporate Advisory; (Independent Director) ▲▲ Taxation; and ▲▲ Management Consultancy 8. Mr. Thai Salas Vijayan Additional Director ▲▲ Information Technology; Nil (Independent) ▲▲ Marketing; ▲▲ Human Resource; ▲▲ Strategic Management; and ▲▲ Corporate Governance

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Sr. Name of the Director Category Special Knowledge/ Practical List and Category No. Experience/ Skills/ Expertise/ of Directorship Competencies in other Listed Companies 9. Mr. Maheswar Sahu Additional Director ▲▲ Strategic Planning; National Aluminum (Independent) ▲▲ Leadership; Company Limited ▲▲ Organization & Institution Building; (Additional Director) ▲▲ Environment Management; ▲▲ Marketing and Policy Making; and ▲▲ Corporate Society Responsibility

10. Mr. Anil Jaggia Additional Director Nil ▲▲ Information Technology - Strategy (Independent) & Implementation; ▲▲ Risk Management; ▲▲ Retail & Wholesale Banking; ▲▲ Governance; ▲▲ Value Creation; ▲▲ Strategic Planning; ▲▲ Stakeholder Management; and ▲▲ Operations and Process Optimization

Notes: ▲▲ In terms of Section 10(2A) of the Banking Regulation Act, 1949 all Directors other than the Chairman and/or Whole-time Directors or MD & CEO cannot hold office continuously for a period exceeding eight (8) years. ▲▲ The Nomination & Remuneration Committee (‘N&RC’) of the Board undertakes the process of due diligence and evaluates every year whether the members of the Board adhere to the ‘fit and proper’ criteria as prescribed by the RBI and the adherence to the ‘fit and proper’ criteria by the members of the N&RC is evaluated by the Board of Directors annually and at the time of appointment of Directors.

Profile of Board of Directors In 2003, he took over as Head of Corporate Banking Coverage and held the position till December 2008 when Mr. Ravneet Singh Gill he was appointed Head of Coverage for Global Markets. (Appointed as MD & CEO of the Bank w.e.f. March 1, 2019) In 2011, he took over as Head of Capital Markets & Treasury Solutions before being promoted as Chief Mr. Ravneet Singh Gill, aged 56 years, is the Executive Officer in 2012. MD & CEO of YES BANK. He holds a Masters degree from Hindu College, Delhi Mr. Ravneet Singh Gill took charge as MD & CEO of the University. He was on the Management Committee of Bank w.e.f. March 1, 2019. Prior to joining YES BANK the Indian Banks Association (IBA) from 2012 to 2018. he was the Chief Executive Officer of in He was also on the Advisory Boards of Daimler India India and was also a member of Deutsche Bank AG’s Asia Ltd. and sits on the Advisory Board of the IPL franchise Pacific Executive Committee since July 2012. Rajasthan Royals. He has approximately 33 years of extensive banking Mr. Ravneet Singh Gill does not hold any equity shares in experience across structured financing, foreign the Bank as on March 31, 2019. exchange, transaction banking, risk management and . Mr. Brahm Dutt He joined Deutsche Bank in 1991 in Private Wealth Mr. Brahm Dutt, aged 68 years, has been on the Board Management and moved to the Corporate Bank in 1993. of YES BANK since July 24, 2013 as a Non-Executive In 1995, India embarked upon the largest telecoms Independent Director. privatization in the world and he ran the Telecoms Group from 1995-2000. During this period, Deutsche Bank Further, Mr. Brahm Dutt, Non-Executive Independent became the pre-eminent ‘Telecoms Bank’ in the country Director, was appointed as ‘Part-Time Chairman’ of the with a dominant market share and telecoms became the Bank w.e.f January 11, 2019, pursuant to the approvals bank’s defining business. received from RBI and will hold office till January 10, 2022.

Annual Report 2018-19 135 During his career in the IAS for 37 years, he held several He was also the Non-Executive Chairman and Independent posts in the State Government of Karnataka as well as in Director on the Board of Bharat Road Network Limited, a the Central Government and rose to the level of Secretary listed company promoted by SREI Group for development to Government of India. Before retirement from the of Highways in the Country. service, he worked as Secretary in the Cabinet Secretariat and in the Ministry of Road Transport & Highways, for Mr. Brahm Dutt does not hold any equity shares in the over three and half years. After retirement from the IAS, Bank as on March 31, 2019. he was an advisor (Energy & Highways) to Government of Karnataka from May 2011 to September 2013. Lt. Gen. (Dr.) Mukesh Sabharwal (Retd.) Besides advising several private companies on issues Lt. Gen. (Dr.) Mukesh Sabharwal (Retd.), aged 67 years, related to SMEs, FDI, Infrastructure, Highways and has been on the Board of YES BANK since April 25, 2012 Power, he was also associated with several government as a Non-Executive Independent Director. committees and task forces. He is a hardcore professional, Gen. Sabharwal had an His core competence is in the area of SME development. outstanding service career, spanning over 40 years in He had held prominent positions such as Joint the Indian Army that began with successfully fighting in Development Commissioner for Handlooms, Ministry of the Indo-Pakistan War in 1971. He has a rich operational Textiles, Executive Director, Indian Silk Export Promotion experience having served in Siachen, Ladakh, Manipur Council and Joint Secretary (SSI), Ministry of Industry, in in North East India, and several tenures in Jammu and Government of India for over 10 years and Director of Kashmir engaged in counter terrorist operations. Industry and Commerce in Karnataka for about 2 years. He has acted as a member on the Board of Directors He was the Corps Commander of the sensitive 15 of SIDBI, NSIC, KSFC, KSSIDC and several other public Corps at Srinagar responsible for maintaining internal sector undertakings associated with development and security and stability within the Kashmir Valley. He was financing of small scale and micro enterprises. He has the Security Advisor to the J&K Government in 2007-08 closely dealt with issues connected with availability of during the President’s Rule arising out of the Amarnath credit to these sectors and was associated with several Shrine Board agitation. high level committees for improving availability of credit to these sectors. As Joint Secretary, the very first initiative He was appointed as the Adjutant General of the for development of micro finance institutions in the Indian Army in 2008, wherein he managed the entire country was taken by him. Human Resources of over 11 lakh officers and soldiers and interests of 22 lakh ex-servicemen. He has sound Some other posts held in Government of India are experience in policy formulation, implementation Chairman, Tariff Authority for Major Ports, Chairman, and monitoring of manpower planning, personnel National Authority for Chemical Weapons, Additional services, recruitment, selection, discipline, vigilance, Secretary (Department of Personnel & Training), welfare and security. Counsellor (Commerce & Finance, Embassy of India, Washington DC) and Deputy Secretary (Ministry of Having done his schooling from St. Columba’s High School, Commerce). In the State Government of Karnataka, he Delhi, he has completed his Masters in Defence Studies held the posts of Principal Home Secretary, Principal from Madras University and Masters in Management Secretary (Disinvestment & Public Sector Reforms), Studies from Osmania University. He is also a Master of CMD, Mysore Paper Mills, Secretary (Education) and also Military Arts and Science from CGSC University, Kansas, worked in the field as Assistant Commissioner in-charge USA, a Master of Strategic Studies from US Army War of sub-division and Deputy Commissioner of Mysore College, Pennsylvania, USA and an M(Phil) in Defence District in Karnataka. Studies from Madras University. He had led several missions as International Consultant He completed his PhD from the Indira Gandhi National for the International Trade Centre, Geneva for preparation Open University, New Delhi in 2015. The subject of his of projects for development of SMEs in Ghana, Nigeria thesis was ‘Terrorism in South Asia and its Relationship to and The Gambia in Africa. He also acted as a Consultant India’s Security’. for UNIDO and UNDP. He was awarded the Param Vishisht Seva Medal for He is M.Sc. (Physics), MA (Economics) & LL.B. and has more distinguished services of an exceptional order by the than 37 years of experience in the Indian Administrative President of India. Earlier, he had been awarded the Services (IAS). Vishisht Seva Medal, the Ati Vishisht Seva Medal and the Bar to Ati Vishisht Seva Medal.

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He retired from service in 2011. In 2015, he was played a pivotal role in strengthening and consolidating nominated by the Raksha Mantri to Chair a Committee Retail Business with centralized process through of Experts to review the litigation and grievances in the Retail Loan Factories and introduction of several new Defence Services of India. In 2016, he was a member of value-based products for customers. His hands-on and the RMC Expert Committee to review the combat potential practice-driven experience facilitated balanced decision of the Defence services. He is currently a Distinguished making with insight into all aspects. Fellow at the Centre for Joint Warfare Studies (CENJOWS) based in New Delhi. He secured several awards and accolades in his illustrious career as a Banker and has also been honored Lt. Gen. (Dr.) Mukesh Sabharwal (Retd.) does not hold any with Outstanding Award for the paper submitted on equity shares in the Bank as on March 31, 2019. ‘Knowledge Management – A Perspective for Public Sector Banks’ in BECON 2003. He was also a Member of Mr. Ajai Kumar the Board of Directors at Indo Zambia Bank Ltd. and Multi Commodity Exchange of India Limited and was also holding Mr. Ajai Kumar, aged 65 years, has been on the Board directorship of various Companies including Nuclear of the Bank since January 29, 2016 as a Non-Executive Power Corporation of India Limited and Metropolitan Non-Independent Director. Stock Exchange of India Limited. Mr. Ajai Kumar had also served the position of the Interim MD & CEO of YES BANK Further, Mr. Ajai Kumar had been appointed as ‘Interim from February 1, 2019 to February 28, 2019. Managing Director and Chief Executive Officer’ of the Bank for the period from February 1, 2019 to He is a Law Graduate and a Post Graduate in Physics February 28, 2019. from University of Allahabad. He is a Certified Associate of Indian Institute of Bankers (CAIIB). He started his Prior to this, he was acting as Senior Strategic Advisor of career with joining as a Direct Officer the Bank since 2014. Mr. Ajai Kumar has a distinguished in the year 1973. career in banking industry having more than 40 years of experience in Public Sector Banking Industry holding Mr. Ajai Kumar holds 3,000 equity shares in the Bank as eminent leadership positions in India and overseas on March 31, 2019. (New York, USA) including as CMD of , Executive Director of UCO Bank and as General Mr. Subhash Chander Kalia Manager & Head of Technology and Retail Banking at Bank of Baroda. Mr. Subhash Chander Kalia, aged 67 years has been on the Board of the Bank since April 3, 2018 as a Non-Executive As CMD of Corporation Bank, he provided strong Non-Independent Director. leadership to take Bank to next level of Business, implemented turnaround strategies successfully by He has rich experience of over 38 years in the Banking creation of strong business processes and structures in Industry holding key positions in India and abroad. the form of Circle Offices for better efficiency and controls, Previously, Mr. Kalia served as an Executive Director launching SME Loan Centres, Agriculture Business of from November 2009 to Development Cells, and several Gold Loan Shoppes. September 2011. He also served as an Executive Director Under his leadership, Corporation Bank emerged as the of Ltd. from October 2008 to November 2009. Bank with very strong financials, best productivity, best Mr. Kalia joined Bank of Baroda in 1973 and worked in asset quality and best customers services among its several capacities up to the level of General Manager till peers. The Bank was ranked No. 1 in the country for its 2008. He was instrumental in setting up Baroda Pioneer performance in MSME finance for the year 2012-13 and Asset Management Company and Baroda L & G Life honored with National award by Prime Minister of India. Insurance Company.

Prior to Corporation Bank, Mr. Ajai Kumar was Executive He has significant expertise in Agriculture lending, Financial Director of UCO Bank wherein, he had developed inclusion and Priority Sector Lending. He has also served significant improvements in structures, systems and on various Committees constituted by RBI/ Association / controls in operations, credit monitoring and supervision. Government of India such as Indian Banks’ Association Committee on Agro Business and Financial Inclusion for In his 36 years of service in Bank of Baroda, he had the year 2010-11, Empowered Committee on External held various positions handling key responsibilities in Commercial Borrowing of RBI, Committee constituted by Head Office, Zonal Offices, Branches, New York Office RBI to re-examine the existing classification and suggest and Off-shore Banking Operations of Nassau, Bahamas, revised guidelines with regard to Priority Sector Lending covering a vast spectrum of banking operations. He also classification and related issues, Committee constituted

Annual Report 2018-19 137 by Government of India to identify issues in financing She brings with her extensive research on Consumer of Projects in Road, Conventional Power, Fuel & Energy, behavior, Customer loyalty, Market research across Urban Transport and other Sectors as identified in Indian consumer focused sectors, with a specific emphasis on Infrastructure Report, etc. creating an all-round experience in customer engagement. She has co-authored numerous papers for Journals and He has also been associated with corporate and NBFCs has also co-authored a chapter, ‘A conceptual framework as advisor in Financial Service sector space. He has rich for determining brand attitude and brand equity through experience in corporate governance practices followed text analytics of social media behavior’ in Encyclopedia of in India and abroad, having served on the Boards of Information Science and Technology. several Banks and Institutions. He has also served as the Chairman of , Pratapgarh, Director on She is a Ph.D. in Marketing and is an MBA (Marketing) the Board of erstwhile Bareilly Corporation Bank Limited, from Pune University. She is a Bachelor of Science Bank Limited, Shahjahanpur Kshetriya Gramin (Microbiology) from Pune University and has qualified Bank Limited and Bareilly Kshetriya Gramin Bank Limited UGC NET in 2012. and various overseas subsidiaries of Bank of Baroda, etc. Dr. Pratima Sheorey does not hold any equity shares in He holds a Bachelor’s degree in Arts from Punjab the Bank as on March 31, 2019. University and a Master’s degree in Political Science, with the distinction of standing first in the University from Guru Mr. Uttam Prakash Agarwal Nanak Dev University and is also a Gold Medalist. He is [Appointed as an Additional Director (Independent) of the also a qualified CAIIB. Bank w.e.f. November 14, 2018] He also served as director on the Board of PNC Mr. Uttam Prakash Agarwal, aged 55 years is a Chartered Infratech Limited, Publications Limited (since Accountant with 3 decades of experience in taxation, December 2017) and INFIN Asset Reconstruction Private finance and restructuring having worked extensively Ltd. (Striking Off as on date). Currently, he also serves as in areas such as statutory audit, income leakage audit, Director on the Board of BOI AXA Investment Managers Concurrent Audit, Stock Audit, of public sector banks Private Limited, IFCI Venture Capital Funds Limited and under RBI’s appointment. He also has an experience of NABARD Financial Services Limited. Companies Audit and Special Audit of Bharat Petroleum, Petroleum, Indian Oil & Larsen Turbo, appointed Mr. Subhash Chander Kalia holds 3,000 equity shares in by Central Board of Excise & Customs. He has carried the Bank as on March 31, 2019. out statutory Audit of Public sector undertaking & Mutual Funds appointed by Control of Audit General (CAG). Dr. Pratima Sheorey Dr. Pratima Sheorey, aged 46 years has been on the Board He also has rich experience in providing tax and of the Bank since April 26, 2018 as a Non-Executive business advisory services to private equity investors, Independent Director. banks, investment banks, brokerage houses and finance companies. She has over 21 years of experience in Academics (Marketing), Consumer behaviour, Market Research, He has been the youngest President of ICAI 2009-10, Training and Customer Insight mapping. She is currently and has been acknowledged by former President of the Director of Symbiosis Centre for Management and India, Smt. Pratibha Devisingh Patil, for his commendable Human Resource Development (SCMHRD), a leading work in the industry and presented with ‘Recognition of B-school in Pune. She is a member of the Academic Excellence Award’. Council, Board of studies and Post-Graduate Admissions Committee of Symbiosis International (Deemed He was also awarded with ‘UDAN 2011’ by the Times of University) and as Associate Dean (Student Affairs). India Group . She was a full time Faculty at SCMHRD as an Associate Professor in the Department of Marketing from July 2007 He also holds the honorary membership of Institute of till April 2013 as well as a Visiting Faculty from June 1999 Chartered Accountants of Australia and Certified Public till January 2001 and Full time Faculty from January 2001 Accountant of Australia. till July 2003. She has also been associated with Hero Corporate Services Limited, ORG – MARG (The Nielson As a prolific speaker, he has addressed various Company) and IMRS India Ltd for Research. conferences, seminars and workshops, organized nationally and internationally by ICAI and has authored several books as well.

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He also holds directorships in various companies and the National Advisory Committee on Accounting has been actively associated for a number of years with Standards constituted by the Ministry of Corporate various professional and social associations. Affairs, Government of India; the Audit Advisory Board and the Government Accounting Standards He has held memberships on several Boards/ Advisory Board, constituted by the CAG; Committees including in BFSI Sectors. Some of his ▲▲ Member on the Board of Insurance Regulatory memberships are as under: and Development Authority (IRDA); Board of Tariff Advisory Committee of IRDA; and ▲▲ Member on the Board of Insurance Regulatory and Development Authority (IRDA), Member on the ▲▲ Member of Standing Committee on Accounting Board of Tariff Advisory Committee of IRDA and also Issues (SCAI) constituted by IRDA; Member of a member of Standing Committee on Accounting SEBI Committee on Disclosures and Accounting Issues (SCAI) constituted by IRDA; Standards (SCODA). ▲▲ Member of Sub-Committee (Audit) of the Board for Mr. Uttam Prakash Agarwal does not hold any equity Financial Supervision of Reserve Bank of India (RBI); shares in the Bank as on March 31, 2019. ▲▲ Member of the Audit Advisory Board and the Mr. Thai Salas Vijayan Government Accounting Standards Advisory Board- both constituted by the Comptroller and Auditor [Appointed as an Additional Director (Independent) of the General of India; Bank w.e.f. December 3, 2018] ▲▲ Member of IFRS Core Group under the Chairmanship Mr. Thai Salas Vijayan, aged 65 years, is an eminent of Secretary, Ministry of Corporate Affairs (MCA); leader, with an impeccable public track record. ▲▲ Member on the Committee on Internal Audit He was the past Chairman of Insurance Regulatory & constituted by the Office of Controller General of Development Authority of India (‘IRDAI’). Before assuming Accounts, Government of India; charge as Chairman, IRDAI in 2013, Mr. Vijayan held several senior leadership positions in various capacities ▲▲ Member of the National Advisory Committee on in the Life Insurance Corporation of India (‘LIC’), India’s Accounting Standards constituted by the Ministry of largest Insurance Company, and assumed responsibility Corporate Affairs, Government of India; as its Chairman in 2006. He took charge as Chairman ▲▲ Technical Advisor on the Board of International of LIC when competition was at its peak upon opening Federation of Accountants (IFAC), Developing of insurance sector in 2001. His career in LIC started Nations Committee (DNC) of IFAC and Small and as a Direct Recruit Officer in the year 1977 and Medium Practices Committee (SMP) of IFAC; some of the important assignments held by him were Managing Director of LIC, Executive Director (IT & BPR), ▲▲ Member on the Board of the Confederation of Asian Director and Chief Executive of LIC Housing Finance and Pacific Accountants (CAPA) and CAPA Sub- Limited Carehomes. committee on Environmental Accounting; ▲▲ Member on the Board of South Asian Federation of His specialization includes Information Technology, Accountants (SAFA) and Chairman of SAFA, SMP Human Resources & Marketing. He was the architect of Committee; the concept of Satellite Offices in LIC which brought about a revolution in customer service. He has participated in ▲▲ Technical Advisor on the Board of International several national and international seminars in the areas Federation of Accountants (IFAC), Developing of Information Technology, Strategic Management, Nations Committee (DNC) of IFAC and Small and Corporate Governance, Financial Management, Value Medium Practices Committee (SMP) of IFAC; creation in Service industry etc. He has received ▲▲ Member of the Disciplinary Committee constituted extensive training in Business Schools like Indian School by the Council of the Institute of Actuaries of India of Business and apex training institutes like NIA, MDC etc. nominated by the Ministry of Finance from 2009 to till Date; He pursued his education in Kerala and holds a special graduate degree from Kerala University. He also holds a ▲▲ Member of the Central Direct Taxes Advisory Diploma in Management. Committee (CDTAC) constituted by the Central Board of Direct Taxes, Department of Revenue, He also serves as director on various companies such as Ministry of Finance, Govt. of India and Regional Direct Muthoot Microfin Limited. Taxes Advisory Committee (RDTAC), New Delhi;

Annual Report 2018-19 139 Mr. Thai Salas Vijayan does not hold any equity shares in He also serves as director on the Board of various the Bank as on March 31, 2019. companies including National Aluminium Company Limited and GSEC Limited. Mr. Maheswar Sahu Mr. Maheswar Sahu does not hold any equity shares in [Appointed as an Additional Director (Independent) of the the Bank as on March 31, 2019. Bank w.e.f. January 24, 2019] Mr. Anil Jaggia Mr. Maheswar Sahu, aged 66 years, is an ex-senior civil servant with over 30 years of leadership experience in [Appointed as an Additional Director (Independent) of the Central and State Governments. He joined the Indian Bank w.e.f. January 24, 2019] Administrative Service (IAS) in 1980 and has served the Government of India and Government of Gujarat in various Mr. Anil Jaggia, aged 57 years, has nearly three decades capacities for more than three decades before retiring as of expertise in the Banking and Financial Services Additional Chief Secretary, Govt. of Gujarat in 2014. covering HDFC Bank, and Citi Bank. A senior banker with an impeccable leadership His career span includes more than 20 years of service track record, Mr. Jaggia brings in considerable expertise in industry and more than 10 years of active involvement in Information Technology along with other areas such in Public Sector Undertaking Management. He has as Customer Service, Operations, Financial inclusion, worked for more than 3 years in United Nations Industrial Enterprise Transformation, Quality Improvement, and Development Organization. He was instrumental in Administration. He is presently an Advisor and Consultant organization of four Vibrant Gujarat events. in Financial Services sector.

He has extensive exposure in Administrative roles, Project He is ex-Group Head and ex-Chief Information Officer of Management, IT projects, Marketing and policy making at HDFC Bank. He is well known in the Banking Industry as District, State and Central levels and has also contributed a Technology leader who spearheaded HDFC Bank’s IT towards infrastructure development, infrastructure function at a market leadership position. At HDFC Bank, he finance, investment, IT development and technology also led various other functions like Financial Inclusion and promotion as well as private sector development. Customer Service. As Chief Operating Officer, he was also He has extensive interaction with International/ National/ a part of core leadership team which helped restructure State Level Industry and Trade Bodies. His area of and recapitalize Centurion Bank of Punjab. He has specialization includes Strategic Planning, Direction and successfully executed three mergers, while integrating Decision, Leadership, Connect & Influence, Coaching, all business processes including IT system in record time. Organization & Institution Building, Large Scale Project He has worked with Citi Bank in India, Singapore and USA Management, Environment Management, Policy Making, in businesses covering Cash Management, International Corporate Society Responsibility and Implementation of Trade, Foreign Exchanges & Derivatives, Asset Sale and Infrastructure Projects. Commercial Cards and worked across functional areas including Business Management, Product Management, He has previously served as the Former Additional Chief Operations, Sales and Trading. He held the position of Secretary (Industries & Mines); Vice Chairman & MD, Head – Forex & Derivatives as his last assignment with Gujarat Industrial Development Corporation (GIDC); Joint Citi Bank in India. Secretary, Ministry of Communication & IT; Project Director, International Centre for Advancement of Manufacturing He is an MBA (PGDM) from IIM Ahmedabad and Technology; Joint Secretary, Ministry of Environment & B. Tech. from IIT Kanpur. Forest, Government of India; Industries Commissioner of Government of Gujarat; Commissioner of Information He is currently on the Board of EpiMoney Private Limited Technology and MD, Gujarat Informatics Limited; Joint and he served on the Boards of HDB Financial Services Secretary Government of India; Joint Managing Director Limited (NBFC subsidiary of HDFC Bank Limited) and SBI of Gujarat Industrial Development Corporation; Managing Cards and Payments Services Private Limited in the past. Director of Gujarat Tourism Corporation; and also Head of He has also served on the Global Customer Advisory Board the District Administration for about eight years. of IBM; and Global Customer Advisory Board of CISCO

He is a B.Sc. (Engg.) in Electrical from NIT, Rourkela (1977), Mr. Anil Jaggia does not hold any equity shares in the and Masters of Public Administration from University of Bank as on March 31, 2019. Birmingham, United Kingdom (1994).

140 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

Mr. Ravinder Kumar Khanna Ms. Shagun Kapur Gogia [Appointed as an Additional Director (Non-Executive [Appointed as an Additional Director (Non-Executive Non-Independent) of the Bank w.e.f. April 26, 2019] Non-Independent) of the Bank w.e.f. April 26, 2019]

Mr. Ravinder Kumar Khanna, aged 68 years, has over 40 Ms. Shagun Kapur Gogia, aged 44 years, is the Founder years of experience in Indian Industry. He started his career and Managing Director of Tuscan Ventures which she in the Process Industry at Ballarpur Industries Limited. founded in 2007. Tuscan was built with a focus on He later promoted his own companies, M/s Techcraft providing value based capital & operational expertise (Techcraft) and Kwik Form Structurals Private Limited to building businesses around disruptive technologies, (Kwik-form). Techcraft developed a software technology financial services, supply chain services & food. park in Noida (U.P.) in the Year 2000 and currently provides infrastructure facilities for software development Prior to founding Tuscan Ventures, Ms. Gogia was at ICICI to various multinationals in India. Kwik-form was involved Ventures, India’s largest private equity fund, where she in manufacturing of pre-engineered steel buildings and handled private equity placements in India. She has 20+ has executed projects with Airports Authority of India, years of extensive experience in General & Financial Central Public Works Department and Indian Railways. Management of corporate bodies.

He is a B. Tech from Indian Institute of Technology (IIT), She is a cum laude Double Major in Economics and Delhi (1971) and Masters in Business Administration from Biology from Tufts University, USA. She also holds an Faculty of Management Studies (FMS), Delhi (1973). MBA in Finance from the Indian School of Business, Hyderabad. Ms. Gogia is also a member of the Young He has also served as President of Rotary Club of Presidents Organisation (YPO). Delhi, Chankyapuri. The said appointment was basis the Joint The said appointment was basis the Joint Recommendation Letter dated April 16, 2019 received Recommendation Letter dated April 16, 2019 received from both the Indian Partners i.e. (i) Mr. Rana Kapoor from both the Indian Partners i.e. (i) Mr. Rana Kapoor and (ii) Ms. Madhu Kapur, Ms. Shagun Kapur Gogia & and (ii) Ms. Madhu Kapur, Ms. Shagun Kapur Gogia & Mr. Gaurav Kapur (legal heirs and successors of Late Mr. Gaurav Kapur (legal heirs and successors of Late Mr. Ashok Kapur). Mr. Ashok Kapur). Ms. Shagun Kapur Gogia held 7,91,25,000 equity shares Mr. Ravinder Kumar Khanna does not hold any equity in the Bank as on April 26, 2019 as a joint holder with shares in the Bank as on April 26, 2019. Ms. Madhu Kapur (as first holder).

Annual Report 2018-19 141 Corporate Governance Structure

BOARD OVERSIGHT

Audit Committee IT Strategy Committee

Board Committee Nomination & on Willful Defaulters & Remuneration Committee Non-Cooperative Borrowers

Board Credit Committee Risk Monitoring Committee Board of Service Excellence Branding Capital Raising Committee Directors & Marketing Committee

Committee of Stakeholders Independent Directors Relationship Committee

Corporate Social Fraud Monitoring Commitee Responsibility Committee

TOP MANAGEMENT OVERSIGHT Asset and Liability Staff Accountability Management Committee Review Committee

Reputation Risk Executive Credit Committee Management Committee

Fraud and Suspicious Transaction Monitoring Security Council Committee Investments and Financial Standing Committee on Markets Management Customer Service Committee Steering Committee for IFRS (INDAS) IT Steering Committee Whistle-Blower MD Committee Management Credit Committee & CEO Model Assessment Committee Product Process Approval Committee Outsourcing Management Committee Retail and Business Banking Credit Commitee Operational Risk Management Committee Enterprise Risk Management & Capital Business Continuity Management Committee Management Committee

Strategy RBS – Reporting Oversight Management Committee Committee

Apex Management Committee for classification Committee of Willful Defaulters

Product & Relationship Management Support Functions

142 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

Governance Structure ▲▲ The Committee of Independent Directors (‘CoID’) evaluates the performance of Non-Independent YES BANK believes in Corporate Governance beyond Directors including MD & CEO, and Chairman of regulatory requirements as there exists a fundamental link the Bank taking into account the views of Executive with the organization of business, corporate responsibility Director and Non-Executive Directors and submit and shareholder’s wealth maximization. In line with these its report to the N&RC. The CoID also evaluates the ethos, the Corporate Governance Structure of the Bank, performance of the Board as a whole and submits has been designed as given below, which provides a the report to the Board. The CoID also assess the comprehensive framework to (i) enhance accountability quality, quantity and timeliness of flow of information to shareholders and other stakeholders, (ii) ensure timely between the Company Management and the Board implementations of the plans and accurate disclosures that is necessary for the Board to effectively and of all material matters, (iii) deal fairly with shareholders reasonably perform their duties. and other stakeholder interests, and (iv) maintain high standards of business ethics and integrity. ▲▲ The Board evaluates the performance of all Directors including the Independent Directors, excluding the A) Board Level Performance Evaluation Director being evaluated, and submits its report to the N&RC. The Bank has in place a Board Evaluation ▲▲ Self Assessment of Performance Evaluation of the Framework setting out the process and the criteria Board level Committees are done by the respective for the performance evaluation which had been Committees and reported to the Board. recommended by the Nomination & Remuneration Committee of the Board (‘N&RC’) and approved ▲▲ N&RC reviews the reports of the CoID and Board by the Board. The said process is in line with the and accordingly, recommends the appointment/ re- provisions of the Companies Act, 2013, Regulations appointment/continuation of Directors to the Board. 17 & 19 of the Listing Regulations and SEBI ▲▲ Based on the recommendation of N&RC, Board may guidance note on the Board evaluation dated take the appropriate action. January 5, 2017, which provides for carrying out the performance evaluation of the Individual Directors ▲▲ The Board considers the performance evaluation of including Independent Directors, Non-Independent Board as a whole as per the report of the CoID and Directors, Managing Director & CEO, Chairman, also reviews the self assessment of the performance Committees of the Board and the Board as a whole. submitted by each of the Board level Committees and take appropriate steps, if deemed necessary. The framework is monitored, reviewed and updated by the Board as and when required, in consultation Criteria of Performance Evaluation with the N&RC, based on need and new compliance requirements, if any. Non-Executive Directors, MD & CEO and Chairman The Performance evaluation is carried out on Qualification and Experience; Attendance at the the basis of criteria provided in the Performance meetings; Participation and contribution; Responsibility Evaluation Forms as under: towards stakeholders; Contribution in Strategic Planning; a) Form A – for Non-Executive Directors including Compliance and Governance; Participation; Performance Independent Directors (‘IDs’) Evaluation and Updation of Knowledge. b) Form B – for Managing Director & CEO Additionally for Independent Directors – Independence c) Form C – for Chairman of Members is also considered. d) Form D – for the Board as a whole In addition to the above criteria, following are the e) Form E – for the Board Level Committees parameters for the performance evaluation of MD & CEO and Chairman: Process of Performance Evaluation ▲▲ Managing Director & CEO Performance of the Bank; Recognition and The following process is being followed by the awards to the Bank; and Recognition and awards Bank for performance evaluation of the Individual to the MD & CEO. Directors, including IDs, Non-IDs, Managing Director & CEO and Chairman, Committees of the Board and the Board as a whole:

Annual Report 2018-19 143 ▲▲ Chairman 3. Directors qualified to continue on the Board having Leadership; Relationships and Communications; understood and discharged their responsibilities Conduct of Meetings; Impartiality; and Resources. and also continue to qualify under the ‘Policy on Board Diversity and Fit and Proper criteria and Board as a whole Succession Planning’ of the Bank. Process/Policy for Appointment to the Board; 4. The Board also noted that given the changing Composition and Diversity; Committees of the Board; external environment, there is need for better Board Meetings; Agenda; Discussions at Board Meetings; allocation of time for business reviews, periodic Cohesiveness of Board decisions; Team Work; Recording refreshers for the Board on key strategic thrusts. of minutes; Board Procedure; Understanding the role and effectiveness; Understanding the Business of the B) Policy on Appointment of Directors Bank; Stakeholder value and Responsibility; Strategy The Bank has a Board approved ‘Policy on Board and Growth; Risk Management and Financial Controls; Diversity and Fit & Proper Criteria and Succession Foresight to avoid crisis and effectiveness in crisis Planning’ (‘Fit & Proper Policy’) which laid down management; Understanding the regulatory environment; the process for appointment of Directors including Board’s communication; Grievance redressal for the required skill sets, experience, etc. The Policy Investors; Conflict of Interest; Review of Board evaluation; covers all the aspects of Board composition, skill Board and Management; Succession Planning; and sets, diversification of the Board of Directors as Induction Program. required under the Companies Act, 2013, Listing Regulations, the Banking Regulations Act, 1949 Board level Committees and other regulatory and business requirements. Composition and Balance of skill sets; Frequency As per the Fit & Proper Policy of the Bank, your and duration; Overall contribution; Relationships; Bank ensures that not less than 51% of the total Communication; Understanding of regulatory number of members of the Board of Directors shall environment and developments; Interaction with the have special knowledge or practical experience in (i) board; Independence of the Committee from the Board; accountancy, (ii) agriculture and rural economy, (iii) Justice to the role of Committee; and Procedure. banking, (iv) co-operation, (v) economics, (vi) finance, (vii) law, (viii) small-scale industry, (ix) Information Outcome of Performance Evaluation Technology (x) Payment & Settlement Systems (xi) Human Resources (xii) Risk Management (xiii) An annual performance evaluation of the Board, Business Management (xiv) any other skill/ special Committees of the Board and the individual members knowledge/ practical experience as may be of the Board was conducted in April 2019 as per the specified by RBI from time to time. aforesaid process and the report on the evaluation were presented at the meeting of the N&RC and the Board of Process for Appointment of Directors. The Directors expressed their satisfaction with the evaluation process. Directors In terms of the Fit and Proper Policy, N&RC of the The feedback of the Board, post completion of the Board identifies and scrutinizes the prospective exercise of performance evaluation of the Board and candidates for the position of Director keeping in Committees of the Board were as under: view the requisite qualifications, expertise, skill sets, track record, etc. relevant to the Banking 1. The Board is functioning as a cohesive body Business and as per the Statutory requirements which is well engaged with different perspectives and as prescribed under the aforesaid Policy. and has performed on all the parameters and The N&RC, post assessing the fulfillment of ‘fit and the Board of the Bank is well balanced in terms proper’ criteria by the candidate on the basis of of diversity of experience and skill sets to meet various declarations and disclosures received from the requirements of the Bank, also confirm to the the candidate, makes the recommendation for the Regulatory requirements. appointment of proposed Director to the Board for 2. The Board and its Committees were effective in its approval. The Board thereafter having considered achieving their respective Charters and the members the recommendation of the N&RC, makes its own acted with diligence and care. Further, important assessment on the proposal for appointment of issues are brought up and discussed in the Board/ Director, basis the business as well as statutory Committee Meetings. requirements. The Board also recommends the

144 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

appointment of Managing Director & CEO and the Terms and Conditions for Part-time Chairman for the approval of RBI. The Board Appointment of Independent then recommends the appointment/re-appointment Directors of Directors to the Shareholders for approval, after Independent Directors fulfill the conditions of taking into consideration the results of performance independence specified in Section 149 of the evaluation, and other statutory requirements. Companies Act, 2013 read with Schedule IV and Regulation 16(1)(b) of the Listing Regulations. Criteria for Appointment of A formal Letter of Appointment has been Independent Directors addressed to Independent Directors at the time of their appointment. The terms and conditions of The N&RC while considering the proposal for appointment of Independent Directors has been appointment of Independent Directors also considers disclosed on the website of the Bank at https:// the criteria of independence prescribed under the www.yesbank.in/about-us/corporate-governance. Companies Act, 2013 and Listing Regulations.

The Independent Directors have confirmed that they C) Remuneration Policy meet the criteria of independence laid down under The Bank has formulated and adopted a the Companies Act, 2013 and the Listing Regulations Remuneration Policy for its Directors, Key Managerial and they are independent from the Management. Personnel, Senior Management, Chairman and other employees of the Bank, in terms of Section 178 of Confirmation by the Board on the Companies Act, 2013, the relevant Rules made Fulfillment of Independence of the thereunder, Regulation 19 of the Listing Regulations Independent Director and Guidelines issued by RBI, in this regard, from time to time. The Bank does not grant any Stock The Board also hereby confirms that the Options to any Directors of the Bank except for Independent Directors of the Bank fulfills all the Mr. Ravneet Singh Gill, MD & CEO of the Bank. conditions specified in the Listing Regulations and The Remuneration Policy has been disclosed on are Independent of the Management. the website of the Bank at https://www.yesbank.in/ about-us/corporate-governance.

D) Directors’ Remuneration The details of the remuneration paid to the Directors during FY 2018-19 are given below: i) Executive Directors (Amount in `) Performance Commission Commission Severance Name of the Director Salary* Stock Options linked Others for Total for Fees incentives FY 2017-18$ FY 2018-19# Mr. Ravneet Singh Gill 5,929,949 Refer Note-1 - - - - 5,929,949 - (MD & CEO)

Mr. Ajai Kumar 1,503,300 - - - - - 1,503,300 - (Interim MD & CEO) Mr. Rana Kapoor 64,841,390 - - - - - 64,841,390 - (Ex MD & CEO) Refer Note-2

Notes: 1. The Bank has executed a service contract with Mr. Ravneet Singh Gill which includes notice period of three months subject to approval RBI. He has also been granted 50 lacs Stock Options on March 1, 2019 at Fair Market Value (FMV) and can exercise the Options granted as per the vesting schedule given under the YBL MD & CEO (New) Stock Option Plan 2019 which is 20%, 30% & 50% each year, from the end of 1st year from the grant date.

2. The Board of Directors of the Bank had considered and approved clawback of 100% of performance bonus paid to Mr. Rana Kapoor for FY 2014-15 and FY 2015-16 net of taxes. The amount of Bonus subjected to clawback was `62,17,823/- for FY 2014-15 and `82,45,416/- for FY 2015-16. For FY 2016-17 and FY 2017-18, the Bank has not paid any bonus to Mr. Rana Kapoor.

Annual Report 2018-19 145 ii) Non-Executive Directors: (Amount in `) Sitting Commission for Commission for Name of the Director Salary* Others Total Fees FY 2017-18$ FY 2018-19# Mr. Ashok Chawla 1,866,667 - 2,375,000 - 4,241,667 - Lt. Gen. (Dr.) Mukesh Sabharwal - - 4,800,000 1,000,000 5,800,000 1,000,000 (Retd.) Mr. Brahm Dutt 669,355 5,125,000 1,000,000 6,794,355 780,822 Mr. Vasant Gujarathi - - 1,175,000 1,000,000 2,175,000 250,000 Mr. Saurabh Srivastava - - 150,000 1,000,000 1,150,000 - Mr. Ajai Kumar - - 4,300,000 1,000,000 5,300,000 916,667 Ms. Debjani Ghosh - - 150,000 750,000 900,000 - Mr. Subhash Chander Kalia - - 5,250,000 - 5,250,000 1,000,000 Dr. Pratima Sheorey - - 1,775,000 - 1,775,000 750,000 Mr. Rentala Chandrashekhar - - 1,125,000 - 1,125,000 250,000 Mr. Uttam Prakash Agarwal - - 1,025,000 - 1,025,000 250,000 Mr. Thai Salas Vijayan - - 8,00,000 - 8,00,000 250,000 Mr. Maheswar Sahu - - 425,000 - 425,000 250,000 Mr. Anil Jaggia - - 575,000 - 575,000 250,000

$ Commission pertaining to FY 2017-18 paid during FY 2018-19 # Commission pertaining to FY 2018-19 payable in FY 2019-20 * Salary includes perquisites, contribution towards provident funds and medical reimbursement. Notes: e) The Bank has not granted any Stock Options to any Directors of the Bank except for Mr. Ravneet Singh a) The Non-Executive Directors were paid sitting fees of Gill, MD & CEO of the Bank. `1,00,000 for attending each meeting of the Board of Directors. Sitting Fees of `50,000 was paid for f) There were no other pecuniary relationships or attending each of the Board Committee Meetings till transactions of non-executive Directors vis-à-vis the June 2018 which was revised to `75,000 per Board Bank (except normal banking transactions). Committee meetings w.e.f. July 2018 at the Board g) Mr. Brahm Dutt, Non-Executive Independent Meeting held on June 12, 2018. Director, was appointed as ‘Part-Time Chairman’ of b) The Board on September 6, 2018, approved the Bank w.e.f January 11, 2019, pursuant to the the appointment of Mr. Subhash Chander Kalia approvals received from RBI and will hold office till and Mr. Ajai Kumar as permanent invitees for January 10, 2022. attending Executive level Committee meetings, h) Mr. Uttam Prakash Agarwal has been inducted on viz. the Apex Management Committee (‘AMCOM’) the Board as ‘Additional Director (Independent) w.e.f. and Staff Accountability Committee (‘SAC’) November 14, 2018. respectively. Accordingly, the sitting fees paid to Mr. Subhash Chander Kalia and Mr. Ajai Kumar i) Mr. Thai Salas Vijayan has been inducted on the includes sitting fees of ` 75,000/- for attending each Board as Additional Director (Independent) w.e.f. meeting of AMCOM & SAC. December 3, 2018. c) The Bank did not pay any amount to directors by j) Mr. Maheswar Sahu and Mr. Anil Jaggia have been way of salary and perquisites except to the MD & inducted on the Board as ‘Additional Directors CEO, Interim MD & CEO and the Chairman. (Independent) w.e.f. January 24, 2019. d) Commission is paid to the Directors pursuant to k) Mr. Ajai Kumar was appointed as Interim MD & CEO the approval of the shareholders’ at the AGM held of the Bank for the period from February 1, 2019 to on June 07, 2016, for payment of profit based February 28, 2019. commission from April 01, 2015 onwards and as l) Mr. Ravneet Singh Gill took charge as the MD & CEO per the provisions of the Companies Act, 2013 and of the Bank w.e.f. March 1, 2019 for the period of RBI Guidelines. three (3) years, i.e. till February 28, 2022.

146 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

m) Mr. Saurabh Srivastava, Non-Executive Independent F) Information Supplied/Available to Director completed his tenure as Director on the the Board Board of the Bank on April 22, 2018 in terms of RBI The Directors are presented with important/critical approval dated January 28, 2016 & March 28, 2018. information on the operations of the Bank as well as n) Ms. Debjani Ghosh, Non-Executive Independent that which requires deliberations at the highest level. Director of the Bank, resigned w.e.f. April 26, 2018. The Board has complete access to all the relevant information within the Bank and also access to the o) Mr. Ashok Chawla, Non-Executive (Independent) Top Management of the Bank and any additional Part-Time Chairman of the Bank resigned w.e.f. information to make informed and timely decisions. November 14, 2018. All Board and Committee meetings are governed p) Mr. Vasant Gujarathi, Non-Executive by structured agenda notes which are backed by Independent Director of the Bank resigned w.e.f. comprehensive background papers along with November 14, 2018. relevant annexures. q) Mr. Rentala Chandrashekhar, Non-Executive Since 2016, as a part of green initiative by the Bank, Independent Director of the Bank resigned w.e.f. all relevant agenda papers pertaining to the Board/ November 19, 2018. Committee are being circulated well in advance to the Board of Directors through web-based portal to r) Mr. Rana Kapoor demitted the office as MD & facilitate easy access of agenda on IPad which would CEO of the Bank w.e.f. close of business hours on provide sufficient time to the Board for reading and January 31, 2019 upon completion of his term as understanding the proposals placed in a meeting. approved by RBI. The Board was presented with the information E) Familiarization Program for Board on various important matters of operations, risk management and business, new initiatives Members in business, budgets, financial results, update In compliance with the requirement of the Listing on Corporate Social Responsibility activities, Regulations, the Bank had conducted various minutes of Board and Committees of the Board, familiarization programmes during the financial appointment and remuneration of the Senior year to familiarize Independent Directors as well Management, appointment/cessation of Key as the Non-Executive Directors, to enable them to Managerial Personnel, details of joint ventures or familiarize with the Bank, its management, their roles, collaborations, if any, information on subsidiaries, rights, responsibilities in the Bank, nature of the sale of investments, assets which are material in Banking Industry, Business Model, Risk Management nature and not in the normal course of business, System and Technology Architecture of the Bank for foreign exposure and non-compliance, if any with the purpose of contributing significantly towards the regulatory or statutory guidelines or in the Listing growth of the Bank. The said programmes aims to Regulations, etc., and other matters which are provide to familiarize the newly appointed Director required to be placed before the Board in terms of the Bank, with the nature of the industry in which of the Companies Act, 2013, Listing Regulations the Bank operates, Strategic Objectives of the Bank, and Theme Based Review agenda as prescribed Business Model of the Bank etc. so as to help them by RBI, etc. The Board and other Committees also contribute significantly during the deliberations in approve various business proposals and regulatory the Board/ Committee meetings. approvals through circulations.

During the year, the Bank has also organized program G) Post Meeting Communication/ to update the Directors on Insolvency and Bankruptcy Code and the IFSC Banking Unit (IBU) of the Bank, Follow up System GIFT City, Gandhinagar. Further, the Directors The Bank has an effective post meeting follow up attended/received trainings being organized by procedure. The Bank has a mechanism to track various Regulators/ Bodies/ Institutions on Digital important decisions taken at the Board/Committee Technologies that enable Banking, the latest trend meetings till the closure of such decisions and in IT Strategy, Cyber Security, Corporate Loan a report on ongoing actionables (Action Taken Fraud Management, Risk and Governance issues, Report) are being placed before the meeting of the etc. The details of such familiarization programs Board/Committees of the Board from time to time. are displayed on the website of the Bank and the Action Taken Report on the decisions taken in a web link thereto is https://www.yesbank.in/about-us/ meeting is placed at the succeeding meeting(s) of corporate-governance. the Board/Committees of the Board.

Annual Report 2018-19 147 H) Succession Planning The Bank believes that a sound Succession Plan for the Directors and Senior Management executives is important for creating a robust leadership pipeline for the Bank. Accordingly, the Bank has put in place the policies for Succession Planning of Directors and Senior Management executives.

III BOARD MEETINGS The Board of Directors of the Bank has decided to conduct atleast Six meetings in a year instead of minimum Four quarterly meetings as a good governance practice. Thirteen Board Meetings were held during the Financial Year ended March 31, 2019 i.e. April 3, 2018, April 26, 2018, June 12, 2018, June 13, 2018, July 26, 2018, August 28, 2018, September 25, 2018, October 25, 2018, December 13, 2018, January 9, 2019, January 24, 2019, January 29, 2019 and March 14, 2019. The maximum gap between any two Board meetings was less than One Hundred and Twenty days.

The names of the members of the Board, their status, their attendance at the Board Meetings and the last AGM, number of other Directorships and Committee membership(s)/chairmanship(s) of each Director as on March 31, 2019 are as under:

No. of Number of other Number of Board No. of Attendance Directorships Committee meetings Board at AGM held memberships Name of the Director Category DIN held of Indian meetings on June 12, (Chairmanships) during Public of other attended 2018 in other their Limited Companies1 companies2 Tenure Companies Mr. Ravneet Singh MD & CEO 00091746 1 1 N.A. - 1 - Gill (Appointed w.e.f. March 1, 2019) Lt. Gen. (Dr.) Mukesh Independent 05155598 13 13 Yes 1 - 1(0) Sabharwal (Retd.) Director Mr. Brahm Dutt^ Non-Executive 05308908 13 13 Yes - - - (Independent) Chairman Mr. Ajai Kumar# Non-Executive, 02446976 13 13 Yes 1 - - Non- Independent Director Mr. Subhash Non-Executive, 00075644 12 12 Yes 2 2 2(0) Chander Kalia Non- (Appointed w.e.f. Independent April 3, 2018) Director Dr. Pratima Sheorey Independent 08120130 11 11 Yes - - - (Appointed w.e.f. Director April 26, 2018) Mr. Uttam Prakash Additional 00272983 5 5 N.A. 2 2 1(1) Agarwal Director (Appointed w.e.f. (Independent) November 14, 2018) Mr. Thai Salas Additional 00043959 5 5 N.A. 3 - 1(0) Vijayan Director (Appointed w.e.f. (Independent) December 3, 2018) Mr. Maheswar Sahu Additional 00034051 2 2 N.A. 9 6 5(3) (Appointed w.e.f. Director January 24, 2019) (Independent)

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No. of Number of other Number of Board No. of Attendance Directorships Committee meetings Board at AGM held memberships Name of the Director Category DIN held of Indian meetings on June 12, (Chairmanships) during Public of other attended 2018 in other their Limited Companies1 companies2 Tenure Companies Mr. Anil Jaggia Additional 00317490 2 2 N.A. - 1 - (Appointed w.e.f. Director January 24, 2019) (Independent)

^ Mr. Brahm Dutt, Non-Executive Independent Director, was appointed as ‘Part-Time Chairman’ of the Bank w.e.f January 11, 2019, pursuant to the approvals received from RBI and will hold office till January 10, 2022. # Mr. Ajai Kumar had been appointed as ‘Interim Managing Director and Chief Executive Officer’ of the Bank for the period from February 1, 2019 to February 28, 2019 and thereafter continued as Non-Executive Non-Independent Director on the Board of the Bank. 1 Includes directorship (s) held in Foreign Companies, Private Limited Companies and Section 8 Companies in India. 2 Includes membership (s) of Audit Committee and Stakeholders’ Relationship Committee of all Indian Public Limited Companies; figures in brackets indicate number of Committee Chairmanship(s) as per Regulation 26 of the Listing Regulations.

Notes: a) None of the Directors of the Bank were members of more than 10 committees or acted as Chairman of more than 5 committees across all Public Limited Companies in which they were Directors in terms of Regulation 26 of the Listing Regulations. b) None of the Directors held directorship in more than 10 Public Limited Companies. c) None of the Directors were related to any Director or were a member of an extended family. d) None of the Independent Directors of the Bank served as Independent Director in more than 7 listed companies. e) Mr. Ajai Kumar, Interim MD & CEO, was not an Independent Director of any other listed company during his tenure as Interim MD & CEO of the Bank. f) Mr. Ravneet Singh Gill, MD & CEO, is not an Independent Director of any other listed company.

IV BOARD COMMITTEES Mr. Shivanand R. Shettigar, Company Secretary acts as the Secretary to all the Board Committees. The Board has constituted various Committees of Directors to monitor the activities in accordance The Bank has twelve Board Committees as on with Board approved terms of reference. March 31, 2019, which are briefly described below: The Board Committees focus on specific areas and take informed decisions on the specific 1. Audit Committee businesses assigned to them in the best interest of the Bank. The Committees also make specific Terms of Reference: recommendations to the Board on various The terms of reference of the Committee include: matters whenever required. All observations, recommendations and decisions of the Committees i. To provide directions and oversee the are placed before the Board for information or for operation of the total audit function in the approval. The Company Secretary adheres to all the Bank (internal as well as external) and issue applicable laws and regulations for conducting the whenever necessary suitable directions and meeting of the Committees as adhered to the Board timely completion of audit plans. meetings. Some of the Committees of the Board ii. To create an open avenue for communication were reconstituted to align with the provisions of between the Board of Directors, Internal the Companies Act, 2013, Listing Regulations, the Auditors and the Statutory Auditors; Banking Regulation Act, 1949 and to meet the business requirements during the year under review. iii. To recommend the appointment including terms of appointment and removal of statutory, The terms of reference of the Board Committees are internal and Secretarial Auditors, fixation of reviewed from time to time atleast annually to align audit fees and also to approve payment for the same with the regulatory/business requirements. other services;

Annual Report 2018-19 149 iv. To review and monitor the adequacy of x. To review Annual Tax Audit statement and the internal control environment and Risk auditors’ report thereon; Management System, adequacy of checks xi. To review Annual Long Form Audit Report as and balances including Management prepared by the Statutory Auditors along with Information Systems (MIS); Management response; v. To review and monitor the independence and xii. To review the information in respect of legal adequacy of internal audit function, its policies, audits of title deeds and other documents for its structure viz. staffing and seniority of the credit exposure of `50 MM and above; official heading the department, coverage and frequency of internal audits; xiii. To review and approve related party transactions including any subsequent vi. To appoint and determine the scope of the modification(s) thereto; Concurrent auditors; xiv. To review, with the management, the statement vii. To discuss and review with the Internal and of uses/application of funds raised through an Concurrent Auditors, their reports/findings issue (public issue, rights issue, preferential with an objective of reporting any significant/ issue, etc.) including statement of deviation, if material findings to the Board; any, and making appropriate recommendations viii. To discuss with statutory auditors, the nature to the Board to take up steps in this matter; and scope of audit as well as post-audit xv. To approve and recommend to the Board discussion to ascertain any area of concern the appointment of CFO (i.e. the whole-time w.r.t. financial statements and the Internal Finance Director or any other person heading Financial Controls; the finance function or discharging that function) ix. To review the results/financial statements after assessing the qualifications, experience & (quarterly, half yearly, annual) standalone as background, etc. of the candidate; well as consolidated along with the Auditors’ xvi. To review the Whistle-blower policy and Vigil report thereon and analyze performance Mechanism for Directors and Employees; of the Bank, along with the Management and recommend the same to the Board with xvii. To review and monitor compliance function, primary focus on: its policies and Implementation of Compliance Frameworks of the Bank; a) matters required to be included in the Director’s Responsibility Statement to be xviii. Review of compliance in respect of the report included in the Board’s report in terms of on the RBS conducted by RBI; Section 134(3)(c) of the Companies Act, xix. Review of compliance on directives issued by 2013 and rules made thereunder; ACB/ Board/ RBI; b) accounting policies and practices and xx. To institute special investigation teams with changes, if any, with reasons for the same; complete access to all records, information c) compliance with accounting standards; and personnel of the Bank, if necessary; d) major accounting entries involving xxi. To review all cases of frauds and attempted estimates based on the exercise of frauds involving amounts of `1 crore and above judgment by management; attempted frauds, along with supplementary material analyzing statistical information and e) significant adjustments made in the details of each fraud; financial statements arising out of audit findings; xxii. To review the functioning of Vigilance Unit and approve the changes to the Vigilance Policy; f) compliance with listing and other legal requirements relating to xxiii. To review significant cases of corruption financial statements; for the quater; g) disclosure of any related xxiv. To review the minutes of the quarterly party transactions; FASCOM, Apex Management Committee and Staff Accountability Committee meetings; h) qualifications in the draft audit report, if any; xxv. To investigate into any matter in relation to the items specified or referred to it by the Board

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and for the said purpose shall have the power is lower including existing loans/ advances/ to obtain professional advice from external investments existing as on the date of coming sources and have full access to information into force of this provision. contained in the records of the Bank; xxviii. To review and monitor the auditor‘s xxvi. To perform any other functions, duty as independence and performance, and stipulated by the Companies Act, Reserve effectiveness of audit process. Bank of India, Securities & Exchange Board of India, Stock Exchanges, and any other xxix. Valuation of undertakings or assets of the regulatory authority or under any applicable Bank, wherever necessary. laws, as prescribed from time to time. xxvii. To review utilization of loans and/or advances xxx. To look into the reasons for substantial defaults from/investment by the in in the payment to the depositors, debenture the subsidiary exceeding `100 crore or 10% holders, shareholders (in case of non-payment of the asset size of the subsidiary, whichever of declared dividends) and creditors.

Nine Audit Committee Meetings were held during FY 2018-19 i.e. on April 3, 2018, April 25, 2018, July 25, 2018, September 25, 2018, October 24, 2018, December 13, 2018, January 23, 2019, February 26, 2019 and March 14, 2019, and not more than one hundred and twenty days lapsed between two consecutive meetings of the Audit Committee. The Statutory Auditors and the Internal Auditors are permanent invitees to the meetings of the Audit Committee.

The Composition of the Audit Committee and details of participation of the Members at the Meetings of the Committee held during the year were as under:

No. of No. of Meetings Name of the Member Category meetings attended held@ Mr. Uttam Prakash Agarwal, Chairman (appointed as Additional Director 4 4 member w.e.f. November 15, 2018) (Independent) Mr. Vasant Gujarathi (ceased as member w.e.f. Non-Executive 5 4 November 14, 2018) Independent Director Mr. Brahm Dutt Non-Executive 9 9 Independent Director Mr. Ashok Chawla (ceased as member Non-Executive 5 5 w.e.f. November 14, 2018) Independent Director Mr. Saurabh Srivastava (ceased as member Non-Executive 1 1 w.e.f. April 23, 2018) Independent Director Mr. Ajai Kumar (ceased as member Non-Executive 7 6 w.e.f. November 15, 2018 and re-appointed Non‑Independent Director as member w.e.f. January 29, 2019) Lt. Gen. (Dr.) Mukesh Sabharwal (Retd.) Non-Executive 5 5 (appointed as member w.e.f. June 12, 2018 Independent Director and ceased as member w.e.f. January 29, 2019) Mr. Subhash Chander Kalia (appointed as member Non-Executive 7 7 w.e.f. April 26, 2018) Non‑Independent Director Mr. Anil Jaggia (appointed as Member Additional Director 2 2 w.e.f. January 29, 2019) (Independent) Dr. Pratima Sheorey (appointed as Member Non-Executive - - w.e.f. March 28, 2019) Independent Director

Annual Report 2018-19 151 No. of Meetings attended as Name of the Director Category Invitee Mr. Subhash Chander Kalia (appointed as Director Non-Executive 1 w.e.f. April 3, 2018) Non‑Independent Director Mr. Rentala Chandrashekhar (ceased to be a Director Non-Executive 3 w.e.f. November 19, 2018) Independent Director Mr. Ravneet Singh Gill (appointed as Director MD & CEO 1 w.e.f. March 1, 2019)

Chairman – ID and Composition – 67% IDs @ Number of meetings held during the tenure of the Director as a Member/Chairman of the Committee

Note: Due to business exigencies, several resolutions were passed through Circulation and the said resolutions have been noted at the subsequent committee meetings.

All members of the Audit Committee are financially literate and Chairman of the Committee has accounting and financial management expertise. The then Chairman of the Audit Committee, Mr. Vasant Gujarathi was present at the last AGM.

2. Risk Monitoring Committee vi. Review, assess and approve setting up of Bank’s Risk Appetite and limits. Monitor compliance of Terms of Reference: risk limits and recommend appropriate actions in cases of breaches; The terms of reference of the Committee include: vii. Review, assess and approve setting up of stress i. Promote prudent Risk Culture in the Bank and testing scenarios as well as review breaches integrate risk management into the Bank’s therein; suggest remedial actions if any; goals and compensation structure; viii. Monitoring compliance as well as critically ii. Assess that the Risk universe for the Bank has analyzing various risk parameters and been adequately identified. Monitor risk profile providing direction for corrective action of the Bank (including credit risk, market risk, wherever necessary; liquidity risk, IRRBB, operational risk, model risk, reputation risk, information security risk, ix. Review of the Bank’s portfolio and providing cyber security related risk, etc.) within the necessary guidance to Management; Board approved overall Risk Appetite of the x. To review the minutes of Executive level Bank as outlined in the ICAAP document; Committees such as Asset Liability Committee iii. Evaluate the adequacy of the risk management (ALCO), Operational Risk Management function, the qualifications and background of Committee (ORMC), Outsourcing Management senior risk officials and review the adequacy of Committee (OMC), Security Council Meeting, the staffing of the Risk Management function Reputational Risk Management Committee to perform its role appropriately; (RRMC), Enterprise Risk and Capital Committee (ERCC), Model Assessment Committee (MAC) iv. Oversee the Bank’s Enterprise Risk and any other risk related committees; Management framework, covering risk identification, measurement, monitoring xi. To perform any other function or duty as and mitigation; stipulated by the Companies Act, Reserve Bank of India, Securities and Exchange Board v. Review, approve and recommend for the Board of India, Stock Exchanges and any other risk management policies, processes and risk regulatory authority or Board of Directors of management framework. Review and assess the Bank or under any applicable laws as may the effectiveness of the policies, processes be prescribed from time to time. and framework, address deficiencies and recommend improvements;

152 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

Six Risk Monitoring Committee meetings were held during FY 2018-19 i.e. on April 25, 2018, July 25, 2018, September 25, 2018, October 24, 2018, January 23, 2019 and February 26, 2019. The Composition of the Risk Monitoring Committee and details of participation of the Members at the Meetings of the Committee held during the year were as under: No. of Meetings No. of Meetings Name of the Member Category held@ attended Mr. Subhash Chander Kalia, Chairman (appointed Non-Executive 5 5 as member w.e.f. April 26, 2018) Non-Independent Director Mr. Ajai Kumar Non-Executive 6 5 Non-Independent Director Mr. Rana Kapoor (ceased as member w.e.f. close MD & CEO 5 5 of business hours on January 31, 2019) Mr. Brahm Dutt Non-Executive 6 6 Independent Director Mr. Ashok Chawla (ceased as member w.e.f. Non-Executive 4 4 November 14, 2018) Independent Director Lt. Gen. (Dr.) Mukesh Sabharwal (Retd.) (ceased as Non-Executive 3 3 member w.e.f. June 12, 2018 and re-appointed as Independent Director member w.e.f. November 15, 2018) Mr. Ravneet Singh Gill (appointed as member MD & CEO - - w.e.f. March 1, 2019)

Name of the Director Category No. of Meetings attended as Invitee

Mr. Subhash Chander Kalia (appointed as Director Non-Executive 1 w.e.f. April 3, 2018) Non-Independent Director

Chairman – NID and Composition – 40% IDs @ Number of meetings held during the tenure of the Director as a Member/Chairman of the Committee Note: Due to business exigencies, several resolutions were passed through Circulation and the said resolutions have been noted at the subsequent committee meetings.

3. Nomination & Remuneration (b) Review the Terms of Reference of the Board Committee Level Committees and recommend the changes therein, if any, to the Board; Terms of Reference: The terms of reference of the Committee include: iv. To scrutinize nominations for Independent/ Non-Executive Directors with reference i. To review the current Board composition, its to their qualifications and experience and governance framework and determine future making recommendations to the Board for requirements and making recommendations appointment/filling of vacancies; to the Board for approval; v. To identify persons who are qualified to ii. To examine the qualification, knowledge, become directors and who may be appointed skill sets and experience of each director in senior management in accordance with the vis-a-vis the Bank’s requirements and their criteria laid down, recommend to the Board effectiveness to the Board on a yearly basis their appointment and removal; and accordingly recommend to the Board for the induction of new Directors; vi. To formulate criteria for evaluation of performance of independent directors and the iii. To review: board of directors; (a) the composition of the existing Committees of vii. To carry out evaluation of every the Board and to examine annually whether director’s performance; there is any need to have a special committee of directors to meet the business requirements viii. Whether to extend or continue the term of of the Bank and accordingly recommend to the appointment of the independent director, Board for formation of a special committee; on the basis of the report of performance evaluation of independent directors;

Annual Report 2018-19 153 ix. To validate ‘fit and proper’ status of all (c) remuneration to Whole-time directors, Directors on the Board of the Bank in terms key managerial personnel and senior of the Guidelines issued by the RBI or other management involves a balance between regulatory authorities; fixed and incentive pay reflecting short and long-term performance objectives x. To develop and recommend to the Board appropriate to the working of the Corporate Governance guidelines applicable Company and its goals; and to the Bank for incorporating best practices; (d) Recommend to the board all xi. To implement policies and processes relating remuneration, in whatever form, payable to Corporate Governance principles; to senior management. xii. To formulate the criteria for determining xvii. To consider grant of Stock Options to qualifications, positive attributes and employees including employees of subsidiaries independence of a director; and administer and supervise the Employee xiii. To devise a Policy on Board diversity; Stock Option Plans; xiv. To recommend to the Board a policy relating xviii. To function as the Compensation Committee to, the remuneration for the directors, key as prescribed under the SEBI (Share Based managerial personnel and other employees Employee Benefits) Regulations, 2014 and is including performance/achievement bonus, authorized to allot shares pursuant to exercise perquisites, retirals, sitting fee, etc.; of Stock Options by employees; xv. To review the Bank’s overall compensation xix. To review the Human Capital Capacity Planning structure and related polices with a view to on annual basis; attract, motivate and retain employees and xx. To review the list of risk takers on annual basis; review compensation levels vis-à-vis other Banks and the industry in general; xxi. To review the HCM Policies and provide suitable guidance for additions/ modification/ xvi. To ensure the following while formulating the deletions, if any; policy on the aforesaid matters: (a) the level and composition of xxii. To review the Succession Planning; and remuneration is reasonable and sufficient xxiii. To perform any other functions or duties as to attract, retain and motivate directors, stipulated by the Companies Act, Reserve key managerial personnel and senior Bank of India, Securities and Exchange Board management of the quality required to of India, Stock Exchanges and any other run the Company successfully; regulatory authority or under any applicable (b) relationship of remuneration to laws as may be prescribed from time to time. performance is clear and meets appropriate performance benchmarks; Fourteen Nomination & Remuneration Committee (N&RC) meetings were held during FY 2018-19 i.e. on April 3, 2018, April 25, 2018, June 12, 2018, July 25, 2018, August 28, 2018, September 25, 2018, October 5, 2018, October 24, 2018, November 13, 2018, November 30, 2018, December 12, 2018, January 9, 2019, January 23, 2019 and January 29, 2019. The Composition of the N&RC and details of participation of the Members at the Meetings of the Committee held during the year were as under:

No. of Meetings No. of Meetings Name of the Member Category held@ attended Lt. Gen. (Dr.) Mukesh Sabharwal (Retd.) Non-Executive 14 14 Chairman Independent Director Mr. Brahm Dutt (ceased as member Non-Executive 13 13 w.e.f. January 24, 2019) Independent Director Mr. Ajai Kumar (ceased as member Non-Executive 3 3 w.e.f. June 12, 2018) Non- Independent Director Mr. Subhash Chander Kalia (appointed as Non-Executive 11 11 member w.e.f. June 12, 2018) Non-Independent Director Mr. Thai Salas Vijayan (appointed as member Additional Director 1 1 w.e.f. January 24, 2019) (Independent)

154 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

Name of the Director Category No. of Meetings attended as Invitee

Mr. Ashok Chawla (ceased to be Director Non-Executive 2 w.e.f. November 14, 2018) Independent Director Mr. Ajai Kumar Non-Executive 3 Non-Independent Director Mr. Brahm Dutt Non-Executive 1 Independent Director Mr. Rana Kapoor (ceased to be Director w.e.f. MD & CEO 4 close of business hours on January 31, 2019)

Chairman – ID and Composition – 67% IDs

@ Number of meetings held during the tenure of the Director as a Member/Chairman of the Committee

Note: Due to business exigencies, several resolutions were passed through Circulation and the said resolutions have been noted at the subsequent committee meetings.

4. Board Credit Committee Terms of Reference: The terms of reference of the Committee include: i. To approve credit proposals that are beyond the approval authority of the Management Credit Committee (MCC), as outlined in the Credit Policy; ii. To approve any other aspects of credit proposals as outlined in the Credit Policy; iii. To approve Investment proposals beyond limits/thresholds delegated to Investment and Financial Markets Management Committee (IFMMC) vide Board approved Investment policy; iv. To review specific cases that might need special attention as and when recommended by MCC / IFMMC; v. To review status of accounts approved by BCC and MCC and any other credit related information as may be required from time to time; vi. To review the minutes of MCC/ IFMMC; and vii. To perform any other function or duty as stipulated by the Companies Act, Reserve Bank of India, Securities and Exchange Board of India, Stock Exchanges and any other regulatory authority or Board of Directors of the Bank or under any applicable laws, as may be prescribed from time to time.

Twelve Board Credit Committee meetings were held during FY 2018-19 i.e. on April 3, 2018, April 25, 2018, June 12, 2018, July 25, 2018, August 28, 2018, September 25, 2018, October 24, 2018, December 12, 2018, December 28, 2018, January 23, 2019, February 26, 2019 and March 26, 2019. The Composition of the Board Credit Committee and details of participation of the Members at the Meetings of the Committee held during the year were as under:

No. of Meetings No. of Meetings Name of the Member Category held@ attended Mr. Ajai Kumar, Chairman Non-Executive 12 11 Non-Independent Director Lt. Gen. (Dr.) Mukesh Sabharwal (Retd.) Non-Executive 12 12 Independent Director Mr. Ashok Chawla (ceased as member Non-Executive 7 7 w.e.f. November 14, 2018) Independent Director Mr. Brahm Dutt Non-Executive 12 12 Independent Director Mr. Subhash Chander Kalia (appointed as Non-Executive 10 10 member w.e.f. June 12, 2018) Non-Independent Director

Annual Report 2018-19 155 Name of the Director Category No. of Meetings attended as Invitee

Mr. Ravneet Singh Gill (appointed as Director MD & CEO 1 w.e.f. March 1, 2019)

Chairman – NID and Composition – 50% IDs

@ Number of meetings held during the tenure of the Director as a member/Chairman of the Committee

Note: Due to business exigencies, several resolutions were passed through Circulation and the said resolutions have been noted at the immediately next Committee meeting.

5. Stakeholders ’ Relationship v. To apprise of Key highlights/developments Committee pertaining to various Stakeholders including Equity Investors, debenture holders, Terms of Reference: multilateral lenders, rating agencies; etc.; The terms of reference of the Committee include: vi. To review the engagements with i. To review and redress complaints from various stakeholders (mentioned above) various security holders such as shareholders, including communication and feedback. debenture holders and any other security Further, recommend steps for improving holders such as non-receipt of dividend, engagement with the stakeholder; non-receipt of interest on debentures, annual vii. To review of measures taken for effective report, transfer/transmission of shares or exercise of voting rights by shareholders. debentures, issue of new/ duplicate share/ debenture certificates, general meeting etc.; viii. To review of adherence to the service standards adopted by the Bank in respect ii. Review of the various measures and of various services being rendered by the initiatives taken by the Bank for reducing Registrar & Share Transfer Agent. the quantum of unclaimed dividends and ensuring timely receipt of dividend warrants/ ix. To review Bank’s perception amongst annual reports/ statutory notices by the stakeholders and provide recommendation for shareholders of the Bank; enhancement of the same; and iii. To oversee and review all matters connected x. To perform any other functions, duties as with transfers, transmissions, dematerialization, stipulated by the Companies Act, Reserve rematerialization, splitting and consolidation of Bank of India, Securities & Exchange Board securities issued by the Bank; of India, Stock Exchanges, and any other regulatory authority or under any applicable iv. To oversee the performance of the Registrar and laws, as amended from time to time. Transfer Agent of the Bank and recommends measures for overall improvement in the Mr. Shivanand R. Shettigar, Company Secretary also quality of investor services; acts as the Compliance Officer of the Bank.

Two Stakeholders Relationship Committee meetings were held during FY 2018-19 i.e. on July 25, 2018 and February 26, 2019. The Composition of the Stakeholders Relationship Committee and details of Members participation at the Meetings of the Committee held during the year were as under:

No. of Meetings No. of Meetings Name of the Member Category held@ attended Mr. Maheswar Sahu, Chairman (appointed as Additional Director 1 1 member w.e.f. January 29, 2019) (Independent) Mr. Ashok Chawla (ceased as member w.e.f. Non-Executive 1 1 November 14, 2018) Independent Director Mr. Rana Kapoor (appointed as member w.e.f. MD & CEO 1 1 June 12, 2018 and ceased as member w.e.f. close of business hours on January 31, 2019) Mr. Vasant Gujarathi (ceased as Member w.e.f. Non-Executive 1 0 November 14, 2018) Independent Director

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No. of Meetings No. of Meetings Name of the Member Category held@ attended Mr. Brahm Dutt (appointed as member w.e.f. Non-Executive 1 1 January 29, 2019) Independent Director Mr. Uttam Prakash Agarwal (appointed as Additional Director 1 1 Member w.e.f. November 15, 2018) (Independent)

Chairman – ID and Composition – 100% IDs

@ Number of meetings held during the tenure of the Director as a Member/Chairman of the Committee

Note: Due to business exigencies, several resolutions were passed through Circulation and the said resolutions have been noted at the subsequent committee meetings. There were 4 open complaints at the beginning of the year and 1,407 complaints were received from the investors/shareholders during the year, out of which 1,384 complaints have been attended to and resolved and 27 complaints were unresolved as on March 31, 2019. 6. Corporate Social Responsibility iii. To monitor the CSR Policy of the Bank Committee from time to time; iv. To institute a transparent monitoring mechanism Terms of Reference: for implementation of CSR projects or programs The terms of reference of the Committee include: or activities undertaken by the Bank; i. To formulate and recommend to the Board, a v. To consider and recommend the Annual CSR Corporate Social Responsibility Policy which Report to the Board for approval; and shall indicate the activities to be undertaken vi. To perform any other function or duty as by the Bank as specified in Schedule VII of the stipulated by the Companies Act, Reserve Companies Act, 2013; Bank of India, Securities and Exchange Board ii. To recommend the amount of expenditure to of India, Stock Exchanges and any other be incurred on CSR activities as indicated in regulatory authority or under any applicable the CSR Policy to the Board in accordance with laws, as may be prescribed from time to time. the provisions of the Companies Act, 2013 and rules made thereunder;

Two Corporate Social Responsibility Committee meetings were held during FY 2018-19 i.e. on April 25, 2018 and October 24, 2018. The Composition of the Corporate Social Responsibility Committee and details of participation of the Members at the Meeting of the Committee held during the year were as under:

No. of Meetings No. of Meetings Name of the Member Category held@ attended Mr. Maheswar Sahu, Chairman (appointed as Additional Director - - member w.e.f. January 29, 2019 (Independent) Mr. Rana Kapoor (ceased as member w.e.f. MD & CEO 2 2 close of business hours on January 31, 2019) Mr. Brahm Dutt (ceased as member w.e.f. Non-Executive 1 1 June 12, 2018) Independent Director Mr. Ashok Chawla (ceased as member w.e.f. Non-Executive 2 2 November 14, 2018) Independent Director Lt. Gen. (Dr.) Mukesh Sabharwal (Retd.) Non-Executive 1 1 (appointed as member w.e.f. June 12, 2018) Independent Director Dr. Pratima Sheorey (appointed as member Non-Executive 1 1 w.e.f. June 12, 2018) Independent Director Mr. Ravneet Singh Gill, (appointed as member MD & CEO - - w.e.f. March 1, 2019) Chairman – ID and Composition – 75% IDs @ Number of meetings held during the tenure of the Director as a member/Chairman of the Committee

Annual Report 2018-19 157 7. Service Excellence, Branding and vi. Review of branding, marketing and customer Marketing Committee engagement activities of the bank; Terms of Reference: vii. Review of activities undertaken to promote digital payments; The terms of reference of the Committee include: viii. Update on the Agenda, Minutes and i. Review product approval process with a view Actionable of ‘Standing Committee of to suitability and appropriateness; Customer Service’; and ii. Formulation and review of comprehensive ix. To perform any other acts, duties as stipulated deposit policy; by the Companies Act, Reserve Bank of India, iii. Review of customer feedback gathered Securities & Exchange Board of India, Stock through annual customer satisfaction survey of Exchanges and any other regulatory authority, depositors and other customers and suggest as prescribed from time to time. action for improvement; x. Update on the activities undertaken for iv. Review of measures taken for enhancing the promotion of digital products. quality of customer service; v. Review the findings of tri-enniel audit on xi. Update on Customer Liability Cases - customer service; (Customer Protection – Limiting Liability of Customers in Unauthorised Electronic Banking Transactions).

Two Service Excellence, Branding and Marketing Committee meetings were held during FY 2018-19 i.e. on September 29, 2018 and February 26, 2019. The Composition of the Service Excellence, Branding and Marketing Committee and details of participation of the Members at the Meetings of the Committee held during the year were as under:

No. of Meetings No. of Meetings Name of the Member Category held@ attended Lt. Gen. (Dr.) Mukesh Sabharwal (Retd.), Non-Executive 2 2 Chairman Independent Director Mr. Rana Kapoor (ceased as member w.e.f. MD & CEO 1 1 close of business hours on January 31, 2019) Mr. Maheswar Sahu (appointed as member Additional Director 1 1 w.e.f. January 29, 2019) (Independent) Mr. Anil Jaggia (appointed as member w.e.f. Additional Director 1 1 January 29, 2019) (Independent) Mr. Ajai Kumar (ceased as member w.e.f. Non-Executive 1 1 January 29, 2019) Non-Independent Director Mr. Ashok Chawla (appointed as member Non-Executive 1 1 w.e.f. June 12, 2018 and ceased as member Independent Director w.e.f. November 14, 2018) Mr. Rentala Chandrashekhar (appointed as Non-Executive 1 1 member w.e.f. June 12, 2018 and ceased as Independent Director member w.e.f. November 15, 2018) Dr. Pratima Sheorey (appointed as member Non-Executive 2 2 w.e.f. June 12, 2018) Independent Director Mr. Ravneet Singh Gill, Chairman (appointed MD & CEO - - as member w.e.f. March 1, 2019)

Chairman – ID and Composition – 80% IDs @ Number of meetings held during the tenure of the Director as a Member/Chairman of the Committee Note: Due to business exigencies, several resolutions were passed through Circulation and the said resolutions have been noted at the subsequent committee meetings.

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8. IT Strategy Committee achieve strategic goals and provide high-level direction for sourcing and use of IT resources; Terms of Reference: xv. To review whether there is a proper balance of The terms of reference of the Committee include: IT investments for sustaining bank’s growth; i. To perform oversight functions over xvi. To become aware about exposure towards IT the IT Steering Committee (at a senior risks and controls and evaluating effectiveness management level); of management’s monitoring of IT risks; ii. To investigate activities within this scope; xvii. To assess Senior Management’s performance iii. To seek information from any employee; in implementing IT strategies; iv. To obtain outside legal or professional advice; xviii. To issue high-level policy guidance (e.g. related to risk, funding, or sourcing tasks); v. To secure attendance of outsiders with relevant expertise, if it considers necessary; xix. To confirm whether IT or business architecture is to be designed, so as to derive the maximum vi. To work in partnership with other Board business value from IT; committees and Senior Management to provide input, review and amend the aligned xx. To oversee the aggregate funding of IT corporate and IT strategies; at a bank-level, and ascertaining if the management has resources to ensure the vii. To approve IT strategy and policy documents; proper management of IT risks; viii. To review that the management has put an xxi. To review IT performance measurement and effective strategic planning process in place; contribution of IT to businesses (i.e., delivering ix. To ratify the IT strategy in alignment with the the promised value); business strategy; xxii. To approve the Cyber Security Policy and x. To provide guidance on the IT organizational Cyber Crisis Management Plan; structure to complements the business model; xxiii. To be aware of the global cyber security xi. To review whether the management has threat landscape and provide guidance on its implemented processes and practices that applicability to the Bank; ensure that the IT delivers value to the business; xxiv. To review the implementation of cyber security xii. To review that IT & Security tools investments tools and processes in line with the approved & budgets represent a balance of policies and regulatory directives. risks and benefits; xxv. To perform any other functions or duties as xiii. To review that IT investments represent a stipulated by the Companies Act, Reserve balance of risks and benefits and that budgets Bank of India, Securities and Exchange Board are acceptable; of India, Stock Exchanges and any other regulatory authority or under any applicable xiv. To monitor the method that management laws as may be prescribed from time to time. uses to determine the IT resources needed to

Six meetings of the IT Strategy Committee were held during FY 2018-19 i.e. on April 25, 2018, July 25, 2018, October 24, 2018, January 23, 2019, March 14, 2019 and March 25, 2019. The Composition of the IT Strategy Committee and details of participation of the Members at the Meetings of the Committee held during the year were as under:

No. of Meetings No. of Meetings Name of the Member Category held@ attended Mr. Anil Jaggia, Chairman (appointed as Additional Director 2 2 member w.e.f. January 29, 2019) (Independent) Mr. Vasant Gujarathi (ceased as member Non-Executive 1 1 w.e.f. April 26, 2018) Independent Director Mr. Ajai Kumar Non-Executive 6 6 Non-Independent Director Lt. Gen. (Dr.) Mukesh Sabharwal (Retd.) Non-Executive 3 3 (appointed as member w.e.f. April 26, 2018 and Independent Director ceased as member w.e.f. November 15, 2018)

Annual Report 2018-19 159 No. of Meetings No. of Meetings Name of the Member Category held@ attended Mr. Subhash Chander Kalia (appointed as Non-Executive 3 3 member w.e.f. April 26, 2018 and ceased as Non-Independent Director member w.e.f. November 15, 2018) Mr. Rentala Chandrashekhar (appointed as Non-Executive 2 2 member w.e.f. June 12, 2018 and ceased Independent Director w.e.f November 15, 2018) Dr. Pratima Sheorey (appointed as member Non-Executive 5 5 w.e.f. June 12, 2018) Independent Director Mr. Maheswar Sahu (appointed as member Additional Director 2 1 w.e.f. January 29, 2019) (Independent)

Name of the Director Category No. of Meetings attended as Invitee Mr. Subhash Chander Kalia (appointed as Non-Executive 1 Director w.e.f. April 3, 2018) Non-Independent Director Mr. Ravneet Singh Gill (appointed as Director MD & CEO 2 w.e.f. March 1, 2019)

Chairman – ID and Composition – 75% IDs @ Number of meetings held during the tenure of the Director as a member/Chairman of the Committee

9. Fraud Monitoring Committee Terms of Reference: The terms of reference of the Committee include: i. To monitor and review in detail all frauds, involving an amount of `1 crore and above so as to: (a) Identify the systematic lacunae, if any, that facilitate perpetration of the fraud and put in place measures to plug the same; (b) Identify reasons for delay in detection and reporting of frauds to top management of the Bank and the Reserve Bank of India/SFIO, etc.; (c) Monitor progress of the investigations by Central Bureau of Investigation/ Police in respect of the cases and recovery position thereof; (d) Ensure that staff accountability is examined at all levels in the cases of frauds and action against staff, if required, is completed quickly, with minimum loss of time; (e) Review the efficacy of the remedial action taken to prevent recurrence of frauds, such as strengthening of internal control environment; ii. To review the report on the Red Flag Accounts (RFA) which shall include the synopsis of the remedial action taken together with their current status; iii. To review electronic banking frauds; and iv. To perform any other act, duties as stipulated by the Companies Act, Reserve Bank of India, Securities & Exchange Board of India, Stock Exchanges, and any other regulatory authority, as prescribed from time to time.

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Three Fraud Monitoring Committee meetings were held during FY 2018-19 i.e. on April 25, 2018, July 25, 2018 and January 23, 2019. The Composition of the Fraud Monitoring Committee and details of participation of the Members at the Meetings of the Committee held during the year were as under:

No. of Meetings No. of Meetings Name of the Member Category held@ attended Mr. Ravneet Singh Gill, Chairman (appointed MD & CEO - - as member w.e.f. March 1, 2019) Mr. Uttam Prakash Agarwal, (appointed as Additional Director 1 1 member w.e.f. November 15, 2018) (Independent) Mr. Rana Kapoor (ceased as member w.e.f. MD & CEO 3 2 close of business hours on January 31, 2019) Lt. Gen. (Dr.) Mukesh Sabharwal (Retd.) Non-Executive 1 1 (ceased as member w.e.f. June 12, 2018) Independent Director Mr. Vasant Gujarathi (ceased as member Non-Executive 2 1 w.e.f. November 14, 2018) Independent Director Mr. Ajai Kumar Non-Executive 3 3 Non-Independent Director Mr. Brahm Dutt (ceased as member Non-Executive 3 3 w.e.f. January 29, 2019) Independent Director Mr. Subhash Chander Kalia (appointed as Non-Executive 2 2 member w.e.f. April 26, 2018) Non-Independent Director Mr. Anil Jaggia, (appointed as member w.e.f. Additional Director - - January 29, 2019) (Independent)

Name of the Member Category No. of Meetings attended as Invitee Mr. Subhash Chander Kalia (appointed as Non-Executive 1 Director w.e.f. April 3, 2018) Non-Independent Director

Chairman – ID and Composition – 40% IDs @ Number of meetings held during the tenure of the Director as a member/Chairman of the Committee

10. Capital Raising Committee Terms of Reference: The terms of reference of the Committee include: i. To analyze various options for infusion of capital and funds by issue of various securities including equity shares, preference shares, debentures, bonds, BASEL III compliant Tier I & Tier II Instruments, other debt securities, etc.; ii. To approve issue of securities in one or more tranches to various potential Investors within the overall limit as approved by the Board/ Shareholders and determine price/price range for the securities; iii. To engage/appoint the issue management and issue related agencies; iv. To incur necessary expenditure relating to capital and fund raising exercise; v. To perform all activities with regard to fund raising by various methods/ means/options under the authority of Board and Shareholders; and vi. To do all such acts, deeds as the Board may delegate in connection with the capital and fund raising exercise.

Annual Report 2018-19 161 The Capital Raising Committee met twice during FY 2018-19 on April 25, 2018 and January 31, 2019. The Composition of the Capital Raising Committee and details of participation of the Members at the Meeting of the Committee held during the year were as under: No. of Meetings No. of Meetings Name of the Member Category held@ attended Mr. Ravneet Singh Gill, Chairman (appointed MD & CEO - - as member w.e.f. March 1, 2019) Mr. Rana Kapoor (ceased as member w.e.f. MD & CEO 2 2 close of business hours on January 31, 2019) Mr. Vasant Gujarathi (ceased as member Non-Executive 1 1 w.e.f. November 14, 2018) Independent Director Mr. Ajai Kumar Non- Executive 2 2 Non-Independent Director Mr. Subhash Chander Kalia (appointed as Non-Executive 1 1 member w.e.f. January 29, 2019) Non-Independent Director

@ Number of meetings held during the tenure of the Director as a member/Chairman of the Committee Note: Due to business exigencies, several resolutions were passed through Circulation and the said resolutions have been noted at the subsequent committee meetings. 11. Board Committee on Willful Defaulters & Non-Cooperative Borrowers Terms of Reference: The terms of reference of the Committee include:

i. To review and confirm the order of the Committee for Classification of borrowers as ‘Non-Cooperative Borrowers’ or ‘Willful Defaulter’; ii. To review the status of ‘Non-Cooperative Borrowers’ or ‘Willful Defaulters’ at least on half yearly or at such other intervals as may be required by RBI; iii. To decide on removal of the names from the list of ‘Non-Cooperative Borrowers’ or ‘Willful Defaulters’ as reported to Central Repository of Information of Large Credits (CRILC); iv. To review, note and decide on any matter pertaining to ‘Non-Cooperative Borrowers’ or ‘Willful Defaulters’; and v. To review/consider publication of the photographs of borrowers, including proprietors/partners/directors/ guarantors of borrower firms/companies, who have been declared as willful defaulters.

The Board Committee on Willful Defaulters and Non-Cooperative Borrowers met twice during FY 2018-19 on April 25, 2018 and January 23, 2019. The Composition of the said Committee and details of participation of the Members at the Meeting of the Committee held during the year were as under:

No. of Meetings No. of Meetings Name of the Member Category held@ attended Mr. Ravneet Singh Gill, Chairman (appointed MD & CEO - - as member w.e.f. March 1, 2019) Mr. Rana Kapoor (ceased as member w.e.f. MD & CEO 2 2 close of business hours on January 31, 2019) Mr. Vasant Gujarathi (ceased as member Non-Executive 1 1 w.e.f. November 14, 2018) Independent Director Lt. Gen. (Dr.) Mukesh Sabharwal (Retd.) Non-Executive 1 1 (ceased as member w.e.f. June 12, 2018) Independent Director Mr. Brahm Dutt (appointed as member Non-Executive 1 1 w.e.f. June 12, 2018 and ceased Independent Director w.e.f. January 29, 2019) Mr. Subhash Chander Kalia (appointed as Non-Executive 1 1 member w.e.f. November 15, 2018) Non-Independent Director

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No. of Meetings No. of Meetings Name of the Member Category held@ attended Mr. Uttam Prakash Agarwal (appointed as Additional Director 1 1 member w.e.f. November 15, 2018) (Independent) Mr. Ajai Kumar (appointed as member w.e.f. Non- Executive - - January 29, 2019) Non-Independent Director Mr. Anil Jaggia (appointed as member w.e.f. Additional Director - - January 29, 2019) (Independent)

Name of the Director Category No. of Meetings attended as Invitee

Mr. Subhash Chander Kalia (appointed as Non-Executive 1 Director w.e.f. April 3, 2018) Non-Independent Director

Chairman – MD & CEO and Composition – 40% IDs @ Number of meetings held during the tenure of the Director as a member/Chairman of the Committee

12. Committee of Independent Directors: Terms of Reference: The terms of reference of the Committee include: i. To review the performance of non-independent directors and the Board as a whole; ii. To review the performance of the Chairperson of the Company, taking into account the views of executive directors and non-executive directors; iii. To assess the quality, quantity and timeliness of flow of information between the Company management and the Board that is necessary for the Board to effectively and reasonably perform their duties; iv. To submit its report as above to Nominations & Governance Committee and the Board of Directors, as the case may be; and v. To perform such other roles as may be prescribed by the Companies Act, 2013, Listing Agreement, SEBI Regulations, Banking Regulation Act, 1949 and the Circulars/Regulations issued by the Regulatory Authorities from time to time. The Committee of Independent Directors met twice during FY 2018-19 on April 26, 2018 and September 25, 2018. The Composition of the Committee of Independent Directors and details of participation of the Members at the Meeting of the Committee held during the year were as under:

No. of Meetings No. of Meetings Name of the Member Category held attended Lt. Gen. (Dr.) Mukesh Sabharwal (Retd.), Non-Executive 2 2 Chairman Independent Director Mr. Brahm Dutt Non-Executive 2 2 Independent Director Mr. Vasant Gujarathi (ceased as member w.e.f. Non-Executive 2 2 November 14, 2018) Independent Director Mr. Ashok Chawla (ceased as member Non-Executive 2 2 w.e.f. November 14, 2018) Independent Director Ms. Debjani Ghosh (ceased as a member Non-Executive 1 1 w.e.f. April 26, 2018) Independent Director Mr. Rentala Chandrashekhar (appointed as Non-Executive 1 1 member w.e.f. June 12, 2018 and ceased Independent Director w.e.f. November 15, 2018) Dr. Pratima Sheorey (appointed as member Non-Executive 1 1 w.e.f. June 12, 2018) Independent Director

Note: Mr. Anil Jaggia, Mr. Maheswar Sahu, Mr. Thai Salas Vijayan and Mr. Uttam Prakash Agarwal were inducted members of the Committee from the date of their appointment. Annual Report 2018-19 163 SPECIAL PURPOSE COMMITTEE The Bank has three subsidiaries as of March 31, Search & Selection Committee 2019 viz. YES Securities (India) Limited (‘YSIL’), YES Asset Management (India) Limited The Search & Selection Committee was constituted (‘YAMIL’) and YES Trustee Limited (‘YTL’) and at the Board Meeting held on September 25, 2018. the Audited Annual Financial Statements of for limited period with specific purpose of Search all the subsidiaries have been provided to the & Selection of New MD & CEO and subsequently Audit Committee of the Board of the Bank. the same was dissolved on completion of the Further, the minutes of the meetings of the specified purpose. Board of subsidiary companies of the Bank are placed in the meetings of the Board of Terms of Reference: Directors of the Bank for review. Statement of significant transactions/arrangements entered The terms of reference of the Committee include: into by the unlisted subsidiary companies of the Bank are also placed at the meetings of the i. To guide the Bank on the selection of a suitable Board of Directors of the Bank, for its review. Global Leadership Advisory Firm; ii. Provide necessary inputs to the nominated B) Related Party Transactions Global Leadership Advisory Firm for the search and selection of the MD & CEO; and There were no materially significant transactions with related parties including iii. Evaluation of potential candidates and promoters, directors, key managerial recommendations to the Nomination & personnel, subsidiaries or relatives of the Remuneration Committee and the Board for Directors during the financial year which final shortlisting. could lead to a potential conflict with the Six Search & Selection Committee Meetings interest between the Bank and these parties. were held during FY 2018-19 i.e. on October 11, The details of the transactions with related 2018, October 26, 2018, November 13, 2018, parties, if any, were placed before the Audit December 12, 2018, December 18, 2018 and Committee from time to time. There were no January 9, 2019: material individual transactions with related parties, which were not in the ordinary course No. of No. of of business of the Bank, nor were there any Name of the Member meetings meetings transactions with related parties, which were held attended not on arm’s length basis. Suitable disclosure Mr. Brahm Dutt, Chairman 6 6 as required by the Accounting Standards Lt. Gen. (Dr.) Mukesh 6 6 (AS18) has been made in the notes to the Sabharwal (Retd.) Financial Statements. Mr. Subhash Chander Kalia 6 6 The Board of Directors has formulated a policy Mr. Thai Salas Vijayan 6 6 on materiality of Related Party Transactions Mr. O.P. Bhatt (ceased as a 3 3 and also on dealing with Related Party member w.e.f. November 15, 2018) Transactions pursuant to the provisions of the Companies Act, 2013 and Listing Regulations. The Committee was subsequently dissolved. The same is displayed on the website of the Bank at https://www.yesbank.in/about-us/ V DISCLOSURES corporate-governance. A) Subsidiary Companies C) MD & CEO / CFO Certification The Bank did not have any material subsidiary The MD & CEO and the Chief Financial Officer having investment of the Bank during (‘CFO’) have issued certificate pursuant to FY 2018-19. The Bank has formulated a policy the provisions of Regulation 17 of the Listing for determining ‘material’ subsidiaries pursuant Regulations certifying that the financial to the provisions of the Listing Regulations statements do not contain any materially and the same is displayed on the website of untrue statement and these statements the Bank https://www.yesbank.in/ about-us/ represent a true and fair view of the Company’s corporate-governance. affairs. They also certify that, to the best of their knowledge and belief, no transactions entered

164 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

into during the year were fraudulent, illegal or For the ease of convenience of the employees violative of the code of conduct of the Bank, and as a part of Bank’s digitization initiative the they are responsible for establishment and reporting mechanism/ process which facilitates maintenance of the Internal Financial Controls employees in reporting of transactions in for financial reporting and they have indicated Securities of the Bank was automated by the to the auditors and the Audit Committee about Bank and made available to the employees any significant changes in internal control under the head of ‘YES ACTS’ and can be over financial reporting, significant changes accessed by the employees through intranet. in the accounting policies and instances of The said system also helps the Compliance significant frauds, if any, which they were Officer in monitoring of transactions done aware. The said certificate is annexed and by Insiders and for sending advisories to the forms part of this Annual Report. defaulting employees who failed to ensure compliance with the Bank’s Code, which D) Code of Conduct and Ethics may result in monetary implications for defaulting employees as may be decided by The Board has formulated and adopted Code the Disciplinary Committee depending on the of Conduct and Ethics for the Board of Directors instance of default. The system also allows and Senior Management. The said code was employees to submit online disclosures while last reviewed by the Board at its meeting held dealing in the Securities of the Bank, i.e. on April 26, 2019 and has been hosted on the submission of initial and continual disclosures website of the Bank at https://www.yesbank.in/ and obtaining of pre-clearances and also to about-us/corporate-governance. submit periodic declarations and updating UPSI recipients’ database etc. The confirmation from the Managing Director & CEO of the Bank regarding compliance with The Bank has also put in place a ‘Code of the Code of Conduct and Ethics by all the Conduct for dealing in Securities of other Listed Directors and Senior Management is annexed and to be Listed entities by the employees of and forms part of this Report. specified departments (‘Grey List Entities’) as the employees of such departments might E) Code of Conduct for Prevention have access to UPSI of Grey List entities for various reasons, viz., Business relationship and of Insider Trading exposure, etc. The Bank has in accordance with the Securities and Exchange Board of India (SEBI) (Prohibition The Bank has organized various awareness of Insider Trading) Regulations, 2015 (SEBI sessions at the Corporate Office for the Regulations) as amended from time to time, benefit of employees with a view to enlighten formulated the ‘Code of Conduct for Prevention employees about the applicability of the of Insider Trading’ in Bank’s Securities (Bank’s Bank’s Code and reporting requirements Code) and the ‘Code of Conduct for dealing under the Bank’s Code. in securities of other Listed and to be Listed entities’ and also the ‘Code of Practices and F) Whistle-Blower Policy Procedures for Fair Disclosure of Unpublished Price Sensitive Information In compliance with the provisions of Listing Regulations, the Companies Act, 2013 and The amended Code is now only applicable other applicable laws and in accordance with to the ‘Designated Persons’ of the Bank and principles of good corporate governance, the its Subsidiary companies. The Designated Bank has devised and implemented a vigil Persons are required to ensure fullest mechanism, in the form of ‘Whistle-Blower compliance with the Bank’s Code at the time Policy’. The policy devised is also aligned to of dealing in Bank’s Securities, which inter alia the recommendations of Protected Disclosure includes equity shares and debentures, (by way Scheme for Private Sector Banks and Foreign of Buy/ Sell/ ESOP exercise/ Pledge Creation/ Banks, instituted by RBI. Pledge Revocation and Invocation of Pledge, etc.). The dealing in Securities also covers This policy enables a Whistle-Blower to raise Securities acquired by way of transmission (as concerns relating to reportable matters (as a legal heir)/ Gift/ Off-market Transactions, etc. elucidated in the said policy) such as breach

Annual Report 2018-19 165 of Bank’s Code of Conduct, fraud, bribery, required to prepare Business Responsibility corruption, employee misconduct, illegality, Report, to adopt Integrated Reporting (‘IR’) health & safety, environmental issues and on a voluntary basis from the FY 2017-18 wastage/ misappropriation of bank funds/ onwards. As a frontrunner in mainstreaming assets, etc., without fear of reprisals and triple bottom line reporting, YES BANK was to provide for independent investigation. India’s 1st Bank to release its annual report in The framework of the policy endeavors line with International Integrated Reporting to simplify and smoothen the process for Council’s Integrated Reporting (IR) guidelines Whistle-Blower and foster responsible with Annual Report FY 2015-16. The Bank reporting, a Whistle-Blower cannot resort to continues to publish its annual report in line with the Whistle-Blower Policy to report his/ her IR guidelines for FY 2018-19. Additionally, the personal grievances. Bank’s Sustainability Report since FY 2015-16 is in alignment with IR guidelines, while adhering The policy has been implemented through to globally accepted sustainability reporting a web-based ‘Corporate Whistle-Blower guidelines by Global Reporting Initiative (‘GRI’). Initiative’ (CWI) portal, which is an independent The Bank’s Sustainability Report is hosted on online reporting service aimed at facilitating the Bank’s website at https://www.yesbank. secure and anonymous communication in/about-us/investor-relations/yes-bank- between the Bank and Whistle-Blower. sustainability-report.

The policy has provisions to safeguard I) Strictures and Penalties Whistle-Blower against victimization. As a responsible and vigilant organization, the Bank During the last three years, there were no encourages responsible and fearless reporting penalties or strictures imposed on the Bank by of genuine concerns or grievances and also the Stock Exchange(s) and/or SEBI and/or any provides for direct access to the Chairman other statutory authorities on matters relating of the Audit Committee of the Board, in to capital market. exceptional cases. However, SEBI had issued a show cause The functioning of the Vigil Mechanism is notice dated June 16, 2017 to the Bank under reviewed by the Audit Committee of the Board Section 15-I of SEBI Act, 1992 and Section regularly. None of the Whistle-Blowers have 23-I of the Securities Contracts (Regulation) been denied access to the Audit Committee Act, 1956, to inquire into and adjudge of the Board. The details of the Whistle-Blower alleged violation of SEBI (LODR) Regulations, Policy are available on the website of the 2015, in respect of the withdrawn QIP in Bank at https://www.yesbank.in/about-us/ September 2016. Pursuant thereto, the Bank corporate-governance. filed an application under SEBI (Settlement of Administrative and Civil Proceedings) G) Dividend Distribution Policy Regulations, 2014. SEBI vide its Settlement Order dated June 29, 2018 disposed of the In terms of the provisions of Regulation 43A of adjudication proceedings initiated against the the Listing Regulations, the Board of Directors Bank and the Bank paid `40 lakh 80 thousand of the Bank had approved the Dividend without admitting or denying the violation. Distribution Policy in line with the parameters prescribed thereunder for payment/distribution J) Human Rights – Best Practices of dividend to the shareholders. The said Policy has been hosted on the Bank’s website YES BANK recognizes the valuable role that under Corporate Governance Section and can business can play in the protection of human be accessed at the link https://www.yesbank. rights and is committed to respect and support in/about-us/corporate-governance. the dignity, well-being and human rights of all stakeholders in line with internationally H) Integrated Reporting recognized frameworks. YES BANK is committed to developing a culture which SEBI issued a circular dated February 6, 2017 inculcates respect & support for Human on ‘Integrated Reporting by Listed Entities’ Rights. YES BANK is the first Indian Banking advising top-500 listed entities, which are sector signatory to UN Global Compact.

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The Bank continues to abide by the 10 Company Secretaries and forms part of this Principles of the Compact covering four major Report. It may be noted that M/s. Mehta & dimensions: human rights, labor, environment Mehta in their said certificate has confirmed and anti-corruption, and uses them as the that the Bank has complied with the conditions foundation for building its sustainable practices of Corporate Governance as prescribed under within the Bank’s operation. Listing Regulations.

K) Green Initiative in Corporate M) Compliance with the Governance Non-mandatory Requirements of The Bank has promoted the ‘Green Initiative’ the Listing Regulations proposed by the Ministry of Corporate Affairs In addition to the mandatory requirements, and the Bank has been effecting the electronic the Bank has also adopted the following delivery of Notice of AGM and Annual Report non-mandatory requirements as suggested in to the shareholders whose E-mail IDs are Regulation 27(1) of the Listing Regulations: registered with the respective (s). The Companies Act, 2013 and (i) Shareholders’ Rights Rules thereunder and Listing Regulations The Bank has sent mid-year provide for circulation of Financial Statements communication to the shareholders’ electronically to the shareholders. consisting of half-yearly financial results and other updates on financial/ The Bank has initiated and implemented overall performance of the Bank during successfully the process of conducting the the half-year ended September 30, Board and Committee meetings using Ipads 2018 of FY 2018-19. based e-meeting application and web based meeting tool in paperless form. This initiative of (ii) Un-Modified Opinion(s) in Audit the Bank has resulted in considerable saving Report on paper and expenditure. The Auditors have expressed an The Bank has also implemented electronic unmodified opinion on the financial platform for reporting of transactions in statements of the Bank. securities of the Bank in compliance with the SEBI (Prohibition of Insider Trading) (iii) Separate posts of Chairman and Regulations, 2015 and Code of Conduct for CEO Prevention of Insider Trading. The Bank has separate positions of the Non-Executive (Independent) Part-Time Shareholders have been requested on several Chairman and the Managing Director & occasions to update their e-mail IDs with their CEO of the Bank. Depository Participant(s) to help accelerate the Bank’s migration to paperless compliances. (iv) Reporting of Internal Auditors L) Compliance with Mandatory The Internal Auditors of the Bank reports Requirements of the Listing directly to the Audit Committee. Regulations N) Disclosure of commodity price The Board of Directors reviews the compliance with all applicable laws on a quartely basis. risks and commodity hedging Your Bank has compliance framework for activities. adherence to the mandatory requirements ▲▲ Information on the commodity price risk of Corporate Governance norms as specified or foreign exchange risk and hedging in Regulations 17 to 27 and clauses (b) to (i) activities in the Bank of sub-regulation (2) of Regulation 46 of the The Bank has Board approved Market Listing Regulations to the extent applicable Risk policy which defines risk control to the Bank. The Bank has obtained framework for undertaking any Commodity certificate affirming the Compliances with price risk and Foreign exchange risk. these regulations from M/s. Mehta & Mehta, Vide Market Risk policy, Board of the

Annual Report 2018-19 167 Bank has defined overall Net Overnight customer offerings and proprietary Open Position (NOOP) Limit, Stop Loss trading in compliance with overall Limit, Aggregate Gap limit (AGL), Value at risk limit and control framework. Risk (VaR) limit to control the Commodity The management of these products Price/Foreign exchange risk within its and businesses is governed by Board risk control framework. The Bank has approved Market Risk Policy, Investment not undertaken any commodity price Policy, Derivatives Policy, Hedging Policy risk during the period. The Bank has and ALM policy of the Bank. undertaken all commodity transactions on ▲▲ Whether the commodity price risks back to back basis. Further, the Bank has and commodity hedging activities are not exceeded any of its Board approved disclosed to the shareholders/publically risk limit framework with respect to Foreign Exchange Risk during the period. The Bank has not undertaken any commodity price risk during the period. The Bank uses Derivatives including The Bank has undertaken all commodity Forwards & swaps for hedging its transactions on back to back basis. currency risk in its balance sheet, O) Disclosures in relation to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013: Particulars Numbers Number of complaints filed during the financial year 10 Number of complaints disposed of during the financial year 8 Number of complaints pending as on the end of the financial year 2

VI SHAREHOLDERS INFORMATION A) Changes in Equity Share Capital of the Bank: As on March 31, 2019 the paid-up equity share capital of the Bank was `4,630,066,078/- consisting of 2,315,033,039 equity shares of `2/- each.

The table below gives details of equity evolution of the Company during the year under review:

No. of Equity Face Value Cumulative Equity Share Date of Allotment Type of Issue Shares Allotted (in `) Capital (No. of shares)

April 18, 2018 ESOPs 1,615,350 2.00 2,304,582,595

May 21, 2018 ESOPs 582,550 2.00 2,305,165,145

June 22, 2018 ESOPs 547,950 2.00 2,305,713,095

July 18, 2018 ESOPs 627,200 2.00 2,306,340,295

August 21, 2018 ESOPs 1,786,325 2.00 2,308,126,620

September 18, 2018 ESOPs 1,151,225 2.00 2,309,277,845

October 12, 2018 ESOPs 1,881,115 2.00 2,311,158,960

November 15, 2018 ESOPs 793,925 2.00 2,311,952,885

December 12, 2018 ESOPs 361,890 2.00 2,312,314,775

January 9, 2019 ESOPs 540,856 2.00 2,312,855,631

February 14, 2019 ESOPs 970,330 2.00 2,313,825,961

March 15, 2019 ESOPs 1,207,078 2.00 2,315,033,039

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B) Dividend mode of payment facility approved by the Reserve Bank of India viz., NACH/ Direct The Board of Directors of the Bank at its meeting Credit/ RTGS / NEFT, etc. held on April 26, 2019 has recommended payment of dividend of `2 per equity share In order to receive the dividend on time, all (100%) of face value of `2 each fully paid-up the eligible shareholders holding shares in for the financial year ended March 31, 2019, demat mode are requested to update with for the approval of the Members at the 15th their respective Depository Participants, AGM of the Bank (Previous Year `2.70 per before May 31, 2019, their correct Bank equity share (135%) of face value `2 each fully Account Number, including 9 Digit MICR Code paid-up). If approved, the dividend shall be and 11 Digit IFSC Code, e-mail ID and Mobile paid on or after June 13, 2019. numbers. This will facilitate the remittance of the dividend amount directly in the bank Modes of making payment of account of the shareholder electronically. Dividend through electronic mode: As mandated in Listing Regulations, listed In case dividend payment by electronic mode companies shall require to make all payments is not executed for any reason, the Bank shall to investors including dividend to the issue a Demand Draft. shareholders, by using any of the electronic

The Dividend History of the Bank for past seven years is given below:

FY 2012-2018 (In %) 135% 120%

100% 90% 80%

60%

40%

2012 2013 2014 2015 2016 2017 2018 Unclaimed Dividend

In terms of the provisions of Section 124(5) claim of the shareholder shall lie against the of the Companies Act, 2013 read with the Bank. However, shareholders may claim their Investor Education and Protection Fund unclaimed amount as per the procedures/ Authority (Accounting, Audit, Transfer and guidelines issued by the Ministry of Corporate Refund) Rules, 2016, as amended from time Affairs (MCA). Dividends for and upto the to time, the Bank is statutorily required to financial year ended March 31, 2011 have transfer to the Investor Education & Protection already been transferred to the IEPF and Fund (‘IEPF’), established by the Central dividend for the financial year ended March 31, Government, all dividends remaining unpaid 2012 shall be transferred to IEPF after the due /unclaimed for a period of 7 (Seven) years, date i.e. August 12, 2019. thereon, from the date of transfer of such Dividend to the Unpaid Dividend Account. Once such amounts are transferred to IEPF, no

Annual Report 2018-19 169 The details of unclaimed dividends for FY 2011-12 onwards and the last date for claiming such dividends are given below:

Dividend for the year ended Date of Declaration of Dividend Last date of claiming Dividend

March 31, 2012 July 14, 2012 August 12, 2019

March 31, 2013 June 8, 2013 July 9, 2020

March 31, 2014 June 14, 2014 July 17, 2021

March 31, 2015 June 6, 2015 July 5, 2022

March 31, 2016 June 7, 2016 July 6, 2023

March 31, 2017 June 6, 2017 July 5, 2024

March 31, 2018 June 12, 2018 July 11, 2025

Shareholders who have not enchased their unpaid or unclaimed for seven consecutive dividend warrants relating to the dividends years or more, requesting them to claim such as specified above are advised to send their dividend so as to avoid the corresponding request letter for payment of unclaimed shares being transferred to the IEPF authority. dividend to Karvy Fintech Private Limited Simultaneously, an advertisement to this (Formerly known as Karvy Computershare effect was published in leading English and Private Limited) or Nodal officer of the vernacular . Bank Mr. Shivanand R. Shettigar. The The aforesaid Rules also prescribe the details of unpaid/unclaimed dividends are procedure to be followed by an investor to available on the website of the Bank https:// claim the Shares/Dividend amount transferred www.yesbank.in/about-us/investors-relation/ to IEPF. Shares which are transferred to the shareholder-information/ir-regulations. IEPF Demat Account can be claimed back by the shareholder from IEPF Authority by Transfer of ‘Underlying Shares’ in following the procedure prescribed under the respect of which dividend has not aforesaid rules. been claimed for seven consecutive years or more, to the IEPF The information pertaining to unpaid/ In terms of Section 124 (6) of the Companies unclaimed dividends for last seven years and Act, 2013 read with Investor Education and the details of such members whose unclaimed Protection Fund Authority (Accounting, Audit, dividend/shares have been transferred to Transfer and Refund) Rules, 2016, as amended IEPF Authority is also available on the Bank’s from time to time, members are requested website https://www.yesbank.in/about-us/ to note that the shares in respect of which investors-relation/shareholder-information/ dividends have been unpaid or unclaimed ir-regulations. for seven consecutive years or more shall be credited to the IEPF Demat Account Intimation to the Investors for maintained with depositories. Upon transfer claiming of dividends of such shares, all benefits (e.g. bonus, spilt Intimation has been sent to the relevant etc.), if any, accruing on such shares shall also shareholders at regular intervals for encashing be credited to the IEPF Demat Account and of unclaimed dividend on equity shares the voting rights on such shares shall remain declared by the Bank from time to time and frozen till the rightful owner claims the shares. corresponding equity shares. In this connection, the Bank had sent intimation letters to members in respect of the shares on which dividend had remained

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C) General Body Meetings and Postal Ballot General Meetings The details of the last three Annual General Meeting(s) of the Bank and the special resolutions passed thereat are given below:

Year Location Day, Date and time Special Resolution 2018 Hall of Culture, Ground Floor, Tuesday, June 12, - Approval for increase in the borrowing limits from Nehru Centre, Discovery of 2018 at 11.00 a.m. `70,000 crore to `110,000 crore. India, Dr. A. B. Road, - Approval for borrowing/ raising funds in Indian/ Worli, Mumbai – 400 018 foreign currency by issue of debt securities upto ` 30,000 crore (the ‘NCDs’) to eligible investors on private placement basis. - Approval for raising of capital upto USD 1 billion by issue of shares or convertible securities in one or more tranches provided however that the aggregate amount raised shall not result in increase of the issued and subscribed equity share capital of the Bank by more than 10% of the then issued and subscribed equity shares of the Bank. - Approval of Employee Stock Option Scheme of the Bank i.e. ‘YBL ESOS – 2018’. - Approval for extending the benefits of Employee Stock Option Scheme of the Bank to the eligible Employees of the Subsidiary Companies of the Bank. 2017 Hall of Culture, Ground Floor, Tuesday, - Approval for increase in the borrowing limits from Nehru Centre, Discovery of June 6, 2017 at `50,000 crore to `70,000 crore. India, Dr. A. B. Road, 4:00 p.m. - Approval for borrowing/ raising funds in Indian/ Worli, Mumbai – 400 018 foreign currency by issue of debt securities including but not limited to non-convertible debentures, MTN (Medium-Term Notes), bonds upto `20,000 crore to eligible investors on private placement basis. 2016 Hall of Culture, Ground Floor, Tuesday, June 7, - Approval for raising of capital upto USD 1 billion Nehru Centre, Dr. A. B. Road, 2016 at 11.00 a.m. by issue of shares or convertible securities in Worli, Mumbai – 400 018 one or more tranches provided however that the aggregate amount raised shall not result in increase of the issued and subscribed equity share capital of the Bank by more than 15% of the then issued and subscribed equity shares of the Bank. - Approval for borrowing/raising funds in Indian/ foreign currency by issue of debt securities including but not limited to non-convertible debentures, MTN (Medium-Term Notes), bonds upto `10,000 crore to eligible investors on private placement basis.

Postal Ballot During the year, no matters were transacted through postal ballot. No Special Resolution requiring Postal Ballot is being proposed on or before the ensuing AGM of the Bank.

Annual Report 2018-19 171 D) Investor Grievance Redressal Shareholders’ Complaints during FY 2018-19:

Particulars No. of Complaints Investor complaints pending as at April 1, 2018 4 Investor complaints received during the year ended March 31, 2019 1,407 Investor complaints resolved during the year ended March 31, 2019 1,384 Investor complaints pending as on March 31, 2019 27

Shareholders’ Requests during FY 2018-19:

Particulars No. of Requests Investor requests pending as at April 1, 2018 8 Investor requests received during the year ended March 31, 2019 795 Investor requests resolved during the year ended March 31, 2019 790 Investor requests pending as on March 31, 2019 13

The Bank receives investor complaints through the meeting) and view the answers for the various sources and informs the Stakeholders same during the live webcast of AGM. Relationship Committee of the Board on the resolution and redressal of the complaints, F) Means of Communication and also to the Board on quarterly basis. The Bank receives investor complaints from The Bank has provided adequate and timely Stock Exchanges, SEBI Complaints Redress information to its members inter-alia through System (SCORES), Registrar of Companies, the following means: Mumbai, through the Bank’s Registrar and ▲▲ Quarterly Results are announced through Transfer Agents, directly from investors’ a Press Conference and a Press Release correspondence and from the investors sent to leading media publications. The personal visits to the Bank. results are also communicated through newspaper advertisements in prominent The Bank has designated E-mail IDs namely national and regional dailies like the [email protected] for Equity investors Economic Times, , DNA, Financial and [email protected] for bond Express, Free Press Journal as well as holders for reporting complaints/grievances. important investor magazines such as The said email Ids are also displayed on the Dalal Street and Capital Market. The website of the Bank. statutory advertisements are released in Navshakti and . E) Queries at Annual General ▲▲ The financial results, official news Meeting releases and presentations are also Shareholders desiring any information with displayed on the website of the Bank regard to the accounts are requested to write (www.yesbank.in) to the Bank at an early date so as to enable the ▲▲ The presentations made to institutional management to keep the information ready. investors and financial analysts on The queries relating to operational and financial the Company’s financial results are performance may be raised at the AGM. displayed on the website of the Bank (www.yesbank.in). The Bank also The Bank provides the facility of Investor informs the Schedule of meeting with Helpdesk at the AGM. Shareholders may post the institutional investors and financial their queries relating to shares, dividends etc., analysts to the Stock Exchanges. at this Investor-Helpdesk. ▲▲ The financial and other information filed The Shareholders can post Questions/ by the Bank from time to time is also Comments at the time of AGM (till the end of available on the websites of the Stock

172 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

Exchanges, i.e., BSE Limited (BSE) at the Board of the Bank have been debarred www.bseindia.com and the National or disqualified from being appointed or Stock Exchange of India Limited (NSE) at continuing as Directors of the Companies www.nseindia.com. NSE and BSE have either by Securities and Exchange Board of introduced online platforms for filing of India or the Ministry of Corporate Affairs or any announcements and other compliance other Statutory Authorities. The said certificate returns viz., NSE Electronic Application forms part of this report. Processing System (NEAPS) and BSE Listing Centre, respectively. Various I) Fees paid to Statutory Auditors compliances as required/prescribed The total fees incurred by the Bank and its under the Listing Regulations are filed subsidiaries on a consolidated basis, for through these systems. services rendered by Statutory auditors and its ▲▲ Filings are also made to the London Stock affiliates entities, is given below: Exchange, Singapore Stock Exchange and India International Exchange IFSC Limited. ` in million Particulars FY 2018-19 ▲▲ The Bank has established systems and Audit Fees 21.70 procedures to disseminate relevant information to its stakeholders, including Statutory Certificates 1.01 shareholders, analysts, suppliers, Reimbursement of Expenses 0.50 customers, employees and the society at Total 23.21 large. It also conducts earning calls with analysts and investors J) Details of utilization of funds ▲▲ Documents like Notices of general During the year under review, there were no meetings, Annual Reports, ECS advises Preferential Allotment or Qualified Institutional for dividends, etc. are sent to the Placement as specified under Regulation shareholders at their e-mail address, 32(7A) of the Listing Regulations. as registered with their Depository Participants/ Company/ Registrar & K) Policies of the Bank Transfer Agents (RTA). This helps prompt delivery of document, reduce paper As a part of good Corporate Governance, the consumption, save trees and avoid loss Bank has from time to time adopted various of documents in transit. policies/codes which are hosted on the website of the Bank at https://www.yesbank.in/ ▲▲ The Bank also publishes its quarterly/ about-us/corporate-governance. half-yearly and annual Financial Results in newspaper(s) as required in terms L) Credit Ratings and Change/ of Section 31 of the Banking Regulation Act, 1949 and Rule 15 of the Banking Revisions in Credit Ratings for Regulation (Companies) Rules, 1949. Debt Instruments ▲▲ ‘CARE AA; Credit watch with developing G) Shareholders Satisfaction Survey implications’ (Double A; Credit watch with developing implications) rating from A Shareholder Satisfaction Survey was CARE to the Additional Tier – I Basel III conducted by the Bank during the year to Compliant Bond Issue of the Bank; assess the overall service standards of the Bank. The findings of the same were placed ▲▲ ‘CARE AA+; Credit watch with developing before the meeting of the Stakeholders implications’ (Double A plus; Credit watch Relationship Committee held in July 2018. with developing implications) rating from CARE to the Basel III Compliant Tier II H) Certificate under Regulation Bond Issue of the Bank; 34(3) of SEBI Listing Regulations ▲▲ ‘CARE AA; Credit watch with developing The Bank has obtained a Certificate pursuant implications’ (Double A; Credit watch to the Regulation 34(3) read with Schedule V with developing implications) rating from of the Listing Regulations, from M/s. U. Hedge CARE to the Tier I Perpetual Bond Issue & Associates, Practising Company Secretaries, of the Bank; confirming that none of the Directors on

Annual Report 2018-19 173 ▲▲ ‘CARE AA; Credit watch with developing ▲▲ ‘[ICRA]A1+; (ICRA A one plus) rating implications’ (Double A; Credit watch with from ICRA to the Certificate of Deposit developing implications) rating from CARE Programme of the Bank; to the Upper Tier II Issue of the Bank; ▲▲ ‘[ICRA]A1+; (ICRA A one plus) rating from ▲▲ ‘CARE AA+; Credit watch with developing ICRA to the Short Term Fixed Deposit implications’ (Double A plus; Credit watch Programme of the Bank; with developing implications) rating from ▲▲ ‘IND AA; Negative’ (Double A; Outlook: CARE to the Lower Tier II Issue of the Bank; Negative) rating from India Ratings to the ▲▲ ‘CARE AA+; Credit watch with developing Additional Tier I Basel III Compliant Bond implications’ (Double A plus; Credit watch Issue of the Bank; with developing implications) rating from ▲▲ ‘IND AA+; Negative’ (Double A Plus; CARE to the Infrastructure Bond Issue of Outlook: Negative) rating from India the Bank; Ratings to the Basel III Compliant Tier II ▲▲ ‘[ICRA]AA- (hyb); Rating watch with Bond Issue of the Bank; negative implications’ (ICRA Double A ▲▲ ‘IND AA+; Negative’ (Double A Plus; minus Hybrid; Outlook: Rating watch with Outlook: Negative) rating from India negative implications) rating from ICRA to Ratings to the Infrastructure Bond Issue the Additional Tier – I Basel III Compliant of the Bank; Bond Issue of the Bank; ▲▲ Ba1; Outlook: Stable rating from Moody’s ▲▲ ‘[ICRA]AA (hyb); Rating watch with Investors Service to the Long term rating negative implications’ (ICRA Double of the bank; A Hybrid ; Outlook: Rating watch with negative implications) rating from ICRA to ▲▲ NP rating from Moody’s Investors Service the Basel III Compliant Tier II Bond Issue to the Short term rating of the bank of the Bank; ▲▲ ‘BWR AA+; Credit watch with developing ▲▲ ‘[ICRA]AA-; Rating watch with negative implications’ (BWR Double A Plus; implications’ (ICRA Double A minus; Outlook: Credit watch with developing Outlook: Rating watch with negative implications) rating from Brickworks to the implications) rating from ICRA to the Tier I Tier I Perpetual Bond Issue of the Bank; Perpetual Bond Issue of the Bank; ▲▲ ‘BWR AA+; Credit watch with developing ▲▲ ‘[ICRA]AA-; Rating watch with negative implications’ (BWR Double A Plus; implications’ (ICRA Double A minus; Outlook: Credit watch with developing Outlook: Rating watch with negative implications) rating from Brickworks to implications) rating from ICRA to the the Upper Tier II Issue of the Bank; and Upper Tier II Issue of the Bank; ▲▲ ‘BWR AA+; Credit watch with developing ▲▲ ‘[ICRA]AA; Rating watch with negative implications’ (BWR Double A Plus; implications’ (ICRA Double A ; Outlook: Outlook: Credit watch with developing Rating watch with negative implications) implications) rating from Brickworks to rating from ICRA to the Lower Tier II Issue the Lower Tier II Issue of the Bank. of the Bank; ▲▲ ‘[ICRA]AA; Rating watch with negative implications’ (ICRA Double A ; Outlook: Rating watch with negative implications) rating from ICRA to the Infrastructure Bond Issue of the Bank;

174 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

M) General Shareholders Information Day, Date, Time and Venue of the Wednesday, June 12, 2019 at 11.00 a.m. Annual General Meeting Hall of Culture, Ground Floor, Nehru Centre, Dr. A. B. Road, Worli, Mumbai – 400 018. Financial Year April 1, 2018 to March 31, 2019 Date of Book Closure Thursday, June 6, 2019 to Wednesday, June 12, 2019 (both days inclusive) Dividend Payment Date Will be paid on or after Thursday, June 13, 2019 Listing on Stock Exchanges Listing on Indian Stock Exchanges: 1. BSE Limited (Equity Shares & Debt Securities) Add: Phiroze Jeejeebhoy Towers Dalal Street, Mumbai – 400 001 2. National Stock Exchange of India Limited (Equity Shares) Add: Exchange Plaza, Plot No. C – 1, Block G, Bandra-Kurla Complex, Bandra (E), Mumbai – 400 051 Notes: 1. Listing Fees for FY 2019-20 has been paid to the above mentioned stock exchanges. 2. The equity shares of the Bank have not been suspended from trading on the said Stock Exchanges or by any Regulatory/ Statutory Authority International Listing (Medium-Term Note): 1. The Singapore Exchange Securities Trading Limited Add – 2, Shenton Way #02-02, SGX Centre 1, Singapore – 068804 2. The London Stock Exchange International Securities Market Add: 10 Paternoster Square London EC4M 7LS United Kingdom 3. India International Exchange IFSC Limited Add: 1st Floor, Unit No. 101, The Signature, Building no. 13B, Road 1C, Zone 1, GIFT SEZ, GIFT City, Gandhinagar, Gujarat – 382 355, India. Stock Code BSE : 532648 NSE : YESBANK ISIN INE528G01027

Market Price Data: High, Low during each month in last financial year: NSE BSE Month High (`) Low (`) Volume High (`) Low (`) Volume Apr-18 369.00 303.60 374,537,093 368.75 303.30 28,766,895 May-18 364.70 325.60 219,774,113 364.40 325.70 10,967,186 Jun-18 350.90 327.30 169,592,710 350.10 327.35 14,441,672 Jul-18 394.35 332.35 301,206,342 393.35 332.45 15,267,780 Aug-18 404.00 336.25 357,430,772 404.00 338.00 18,666,053 Sep-18 348.00 165.00 1,151,080,075 350.00 166.15 77,946,975 Oct-18 268.95 168.60 1,172,274,128 268.45 168.60 94,600,562 Nov-18 230.85 146.75 1,347,639,115 231.40 147.00 124,982,184 Dec-18 193.20 160.00 1,094,251,220 194.30 160.20 101,000,815 Jan-19 245.00 181.00 1,379,229,713 236.30 181.15 121,866,300 Feb-19 236.80 168.10 1,282,472,819 236.90 167.65 107,877,882 Mar-19 281.50 228.65 667,861,552 281.30 228.80 58,026,987

Annual Report 2018-19 175 PERFORMANCE OF THE BANK’S EQUITY SHARES AS COMPARED WITH NSE NIFTY INDICES DURING THE FY. 2018-19

12000 390 11500 365 340 11000 315 290 10500 265 240 10000 215

9500 190 165 9000 140

01-Jul-18 01-Apr-18 01-May-18 01-Jun-18 01-Aug-18 01-Sep-18 01-Oct-18 01-Nov-18 01-Dec-18 01-Jan-19 01-Feb-19 01-Mar-19 ― Nifty Closing Value ― YBL Closing Price (NSE)

PERFORMANCE OF THE BANK’S EQUITY SHARES AS COMPARED WITH S&P BSE SENSEX DURING THE FY 2018-19

39000 400 375 38000 350 37000 325

36000 300 275 35000 250 34000 225 200 33000 175 32000 150

01-Jul-18 01-Apr-18 01-May-18 01-Jun-18 01-Aug-18 01-Sep-18 01-Oct-18 01-Nov-18 01-Dec-18 01-Jan-19 01-Feb-19 01-Mar-19 ― Sensex Close Price ― YBL Closing Price (BSE)

176 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

Registrar and Transfer Agents EQUITY Karvy Fintech Private Limited (Formerly known as Karvy Computershare Private Limited) Add: Karvy Selenium Tower B, Plot 31-32, Gachibowli Financial District, Nanakramguda, Hyderabad – 500 032. Tel: 040 – 6716 2222 Fax: 040 – 2300 1153 Contact Person: Ms. Shobha Anand/Mr. Revanth Yeeravalli E-mail: [email protected] DEBT Link Intime India Pvt. Ltd., Add: C 101, 247 Park, L B S Marg, Vikhroli West, Mumbai – 400 083, Tel: +91 22 4918 6000, Fax: +91 22 4918 6060, Contact Person: Mr. Ganesh Jadhav/Mr. Sharad Amin, E-mail: [email protected] MEDIUM-TERM NOTE The Hongkong and Shanghai Banking Corporation Limited Add – Level 30, HSBC Main Building 1 Queen’s Road Central Hong Kong Share Transfer System The Board has delegated the authority for approving transfer, transmission, etc. of the Bank’s securities to the Managing Director & CEO and the Company Secretary. The Bank’s shares are traded under compulsory dematerialized mode. A half- yearly certificate of compliance with the share transfer formalities as required under Regulation 40(9) of the Listing Regulations is obtained from the Company Secretary in Practice and a copy of the certificate is filed with the Stock Exchanges. Updation of Permanent Account Members’ attention is invited to SEBI’s circular no SEBI/HO/MIRSD/0081/ Number (PAN) and Bank Details CIR/P/2018/73 dated April 20, 2018 pursuant to which the Bank has written to shareholders holding shares in physical form requesting them to furnish their PAN and Bank details for payment of dividend through electronic mode. Those shareholders who are yet to respond to the Bank’s request in this regard are once again requested to take action in the matter at the earliest. Further, Members who hold shares in physical form are advised that SEBI has mandated to furnish a copy of the PAN card of the transferor(s), transferee(s), surviving joint holders/legal heirs while obtaining the services of transfer, transposition, transmission and issue of duplicate share certificates. Reconciliation of Share Capital Reconciliation of Share Capital Audit, as mandated by SEBI, has been carried Audit out by Company Secretary in Practice on quarterly basis, and reports on the reconciliation of total issued and listed capital with that of total share capital admitted/ held in dematerialized form with NSDL and CDSL and those held in physical form. The Report in this regard has been submitted to stock exchanges viz., BSE Ltd. and National Stock Exchange of India Ltd. on quarterly basis and being placed before the Board of Directors of the Bank for its review.

Annual Report 2018-19 177 Distribution of Shareholding as on March 31, 2019 No. of Category (Amount) % Total Shares Amount in ` % of Amount shareholders Up to 5,000 761,024 98.97 1,94,881,068 389,762,136 8.42 5,001 – 10,000 4,007 0.52 28,924,290 57,848,580 1.25 10,001 – 20,000 1,817 0.24 25,544,080 51,088,160 1.1 20,001 – 30,000 551 0.07 13,587,142 27,174,284 0.59 30,001 – 40,000 276 0.04 9,743,629 19,487,258 0.42 40,001 – 50,000 184 0.02 8,344,401 16,688,802 0.36 50,001 – 100,000 329 0.04 23,444,169 46,888,338 1.01 100,001 & Above 766 0.1 2,010,564,260 4,021,128,520 86.85 TOTAL 768,954 100 2,315,033,039 4,630,066,078 100

Shareholding Pattern as on March 31, 2019

Sr. Category of shareholders No. of shares % No. I Promoter & Promoter Group 1(a) Rana Kapoor 100,000,000 4.32 1(b) YES Capital (India) Private Limited 75,625,000 3.27 1(c) Morgan Credits Private Limited 70,250,000 3.03 2(a) Madhu Kapur 175,275,000 7.57 2(b) Mags Finvest Pvt. Ltd. 37,215,025 1.61 Total 458,365,025 19.80 II Other Institutions Mutual Funds/UTI 220,932,584 9.54 Financial Institutions/Banks 3,472,014 0.15 Insurance Companies 257,080,989 11.10 Foreign Portfolio Investors 933,732,877 40.33 III Other Non-Institutions Bodies Corporate 58,513,858 2.53 IV Individuals (i) Individuals holding nominal share capital upto `2 lakh 257,564,441 11.13 (ii) Individuals holding nominal share capital in excess of `2 lakh 65,556,112 2.83 V Trusts 11,098,315 0.48 VI Non-Resident Indians 206,190,73 0.89 VII H U F 7,365,612 0.32 VIII Clearing Members 16,340,940 0.71 IX Foreign Nationals 1,235 0.00 X NBFCs registered with RBI 1,70,595 0.01 XI Alternative Investment Fund 4,097,090 0.18 XII IEPF 1,18,511 0.01 Total 2,315,033,039 100.00

178 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

SHAREHOLDING PATTERN (%)

 Promoter & Promoter Group 19.80  Mutual Funds 9.54  Foreign Institutional Investors 40.33  Insurance Companies 11.10  Individuals 13.96  Bodies Corporate 2.53  Others 2.74

List of Shareholders holding more than 1% shares in the Bank as on March 31, 2019 Sr. No. Name No. of shares % Promoter & Promoter Group 1(a) Rana Kapoor 100,000,000 4.32 1(b) YES Capital (India) Private Limited 75,625,000 3.27 1(c) Morgan Credits Private Limited 70,250,000 3.03 2(a) Madhu Kapur 175,275,000 7.57 2(b) Mags Finvest Pvt. Ltd. 37,215,025 1.61 Others 3 Life Insurance Corporation of India along with its various schemes 205,530,999 8.88 4 Jasmine Capital Investments PTE. Ltd. 49,145,641 2.12 5 College Retirement Equities Fund - Stock Account 43,265,824 1.87 6 WF Asian Smaller Companies Fund Limited 38,357,392 1.66 7 SBI along with its various schemes 37,325,575 1.61 8 UTI along with its various schemes 37,253,279 1.61 9 Government Pension Fund Global 35,944,985 1.55 10 Franklin Templeton Mutual Fund 32,674,728 1.41 11 T. Rowe Price Emerging Markets Stock Fund 31,625,432 1.37 12 Vanguard Emerging Markets Stock Index Fund, A Series 26,771,413 1.16 13 Vanguard Total International Stock Index Fund 26,465,216 1.14 14 HDFC Trustee Company Ltd. along with its various schemes 24,386,181 1.05 15 Vontobel Fund - MTX Sustainable Asian Leaders (Ex 24,236,974 1.05

Annual Report 2018-19 179 Dematerialization of shares and liquidity As on March 31, 2019, the Share Capital of the Bank was held in the dematerialized form comprising of 2,314,929,754 Equity Shares of Face Value `2 each (99.99%), out of which (94.99%) with NSDL and (5.01%) with CDSL and 103,285 shares were being held in physical form (0.01%). Shareholders are requested to convert their physical holdings into electronic holdings which will negate risks associated with physical certificates. Further, SEBI vide notification No. SEBI/LAD-NRO/GN/2018/24 dated June 8, 2018, has amended Regulation 40 of SEBI (Listing Obligations and Disclosure Requirements) 2015, mandating transfer of securities to be carried out only in dematerialised form with effect from December 5, 2018. Thereafter, SEBI has extended the deadline for transfer of securities only in Demat mode effective from April 1, 2019. The aforesaid requirements were brought to the notice of the shareholders’ and also been hosted on the website of the Bank www.yesbank.in Outstanding GDRs/ ADRs/ Warrants or any The Bank does not have any Outstanding GDRs/ ADRs/ Warrants or Convertible instruments, conversion date any other Convertible instrument as on date. and likely impact on equity Commodity price risk or foreign exchange The information on the Commodity price risk or foreign exchange risk risk and hedging activities and hedging activities is explained elsewhere in this report. Plant Locations As the Bank is engaged in the business of banking/financial services, there is no plant location. Debenture Trustees: IDBI Trusteeship Services Limited Asian Building, Ground Floor, 17, R Kamani Marg, Ballard Estate, Mumbai – 400 001 Contact Person: Mr. Sunny Nihalani, Vice President Phone No.: 022 – 4080 7001 Fax No.: 022 – 6631 1776

Axis Trustee Services Limited Axis House, Ground floor, Wadia International Centre, Pandurang Budhkar Marg, Worli, Mumbai – 400 025 Contact Person: Mr. Ankit Singhvi, Senior Manager Phone No.: 022 – 6226 0084 Fax No.: 022 – 2425 4200 Address of the Compliance Officer Mr. Shivanand R. Shettigar, Group Company Secretary YES Bank Tower, IFC 2, 15th Floor, Senapati Bapat Marg, Elphinstone Road (West), Mumbai - 400 013 Phone No.: 022 - 3366 9000 / 3347 8301 Fax No.: 022 – 2421 4500 E-mail: [email protected]

For and on behalf of the Board of Directors

Ravneet Singh Gill Brahm Dutt Managing Director & CEO Chairman (DIN: 00091746) (DIN: 05308908)

Place: Mumbai Date: April 26, 2019

180 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

Compliance with the Code of Conduct and Ethics I confirm that all Directors and members of the Senior Management have affirmed compliance with YES BANK Code of Conduct and Ethics.

For YES BANK Limited

Ravneet Singh Gill Managing Director & CEO Place: Mumbai (DIN No.: 00091746) Date: April 26, 2019

CEO / CFO Certification

We, Ravneet Singh Gill, Managing Director & CEO and Raj Ahuja, Group Chief Financial Officer, of YES Bank Limited (the ‘Bank’) hereby certify that: a) We have reviewed financial statements and the cash flow statement for the year ended March 31, 2019 of the Bank and that to the best of our knowledge and belief: i. these statements do not contain any materially untrue statement or omit any material fact or contain any statements that might be misleading; ii. these statements together present a true and fair view of the Bank’s affairs and are in compliance with existing accounting standards, applicable laws and regulations. b) There are, to the best of our knowledge and belief, no transactions entered into by the Bank during the year which are fraudulent, illegal or violative of the Bank’s Code of Conduct. c) We accept responsibility for establishing and maintaining internal controls for financial reporting and that we have evaluated the effectiveness of internal control systems of the Bank pertaining to financial reporting and have disclosed to the Auditors and Audit Committee, deficiencies in the design or operation of such internal controls, if any, of which we are aware and the steps we have taken or proposed to take to rectify these deficiencies. d) We have indicated, to the Auditors and the Audit Committee: i. significant changes in internal control over financial reporting during the year; ii. significant changes in accounting policies during the year and that the same have been disclosed in the notes to the financial statements; and iii. instances of significant fraud of which we have become aware and the involvement therein, if any, of the management or an employee having significant role in the Bank’s internal control system over financial reporting.

Yours faithfully

Ravneet Singh Gill Raj Ahuja Managing Director & CEO Group Chief Financial Officer (DIN: 00091746)

Place: Mumbai Date: April 26, 2019

Annual Report 2018-19 181 Certificate on Corporate Governance

To, The Members, YES BANK Limited

We have examined the compliance of conditions of Corporate Governance by Yes Bank Limited (hereinafter referred as ‘Company’) for the Financial year ended March 31, 2019 as prescribed under Regulations 17 to 27, clauses (b) to (i) of sub-regulation (2) of regulation 46 and paras C, D and E of Schedule V of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred as ‘Listing Regulations’).

We state that compliance of conditions of Corporate Governance is the responsibility of the management, and our examination was limited to procedures and implementation thereof adopted by the Company for ensuring compliance with conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.

In our opinion, and to the best of our information and according to our examination of the relevant records and the explanations given to us, we certify that the Company has complied with the conditions of Corporate Governance as prescribed under Listing Regulations.

We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the management has conducted the affairs of the Company.

This certificate is issued solely for the purposes of complying with Listing Regulations and may not be suitable for any other purpose.

For Mehta & Mehta, Company Secretaries (ICSI Unique Code P1996MH007500)

Atul Mehta Partner FCS No.: 5782 CP No.: 2486

Place: Mumbai Date: April 26, 2019

182 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

Certificate under Regulation 34(3) of SEBI Listing Regulations

Based on my scrutiny of the records, documents and information provided by YES BANK Limited (the ‘Bank’), CIN- L65190MH2003PLC143249, having its registered office at YES Bank Tower, IFC – II, 15th Floor, Senapati Bapat Marg, Elphinstone (W), Mumbai - 400 013, for verification and disclosures and declarations given by the Directors to the Bank under applicable statutes and also based on the verification of facts regarding the Board of Directors of the Bank, available in the public domain, I, hereby certify that the none of the Directors on the Board of the Bank have been debarred or disqualified from being appointed or continuing as Directors of companies either by the Securities and Exchange Board of India or the Ministry of Corporate Affairs or any such statutory authority.

For U. Hegde & Associates, Company Secretaries,

Umashankar K Hegde (Proprietor) M.No.: ACS 22133 Date: April 26, 2019 CP.No.: 11161 Place: Mumbai

Annual Report 2018-19 183 FINANCIAL STATEMENTS STANDALONE FINANCIAL STATEMENTS Independent Auditor’s Report 185 Balance Sheet 194 Profit and Loss Account 195 Cash Flow Statement 196 Schedules 198

CONSOLIDATED FINANCIAL STATEMENTS Independent Auditor’s Report 258 Balance Sheet 268 Profit and Loss Account 269 Cash Flow Statement 270 Schedules 272 Form AOC - 1 & Disclosures under Basel III 303

184 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

Independent Auditor’s Report

To the Members of Section 143 (10) of the Act. Our responsibilities YES BANK Limited under those SAs are further described in the Auditor’s Responsibilities for the Audit of the standalone financial REPORT ON THE AUDIT statements Section of our report. We are independent of the Bank in accordance with the Code of Ethics OF THE STANDALONE issued by the Institute of Chartered Accountants of India FINANCIAL STATEMENTS together with the ethical requirements that are relevant to our audit of the standalone financial statements under Opinion the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities We have audited the standalone financial statements in accordance with these requirements and the Code of YES BANK Limited (the ‘Bank’), which comprise the of Ethics. We believe that the audit evidence we have standalone balance sheet as at 31 March 2019, the obtained is sufficient and appropriate to provide a basis standalone profit and loss account, the standalone for our opinion. cash flow statement for the year then ended, and notes to the standalone financial statements, including a summary of significant accounting policies and other Emphasis of matter explanatory information. We draw attention to Note 18.7.17 to the standalone financial statements which describes the ongoing In our opinion and to the best of our information and enquiry by the Bank into certain anonymous according to the explanations given to us, the aforesaid whistle-blower allegations. standalone financial statements give the information required by the Banking Regulation Act, 1949 as well Our opinion is not modified in respect of this matter. as the Companies Act, 2013 (the ‘Act’) in the manner so required for banking companies and give a true and fair view in conformity with the accounting principles Key audit matters generally accepted in India, of the state of affairs of the Key audit matters are those matters that, in our Bank as at 31 March 2019, and profit and its cash flows professional judgment, were of most significance in our for the year ended on that date. audit of the standalone financial statements of the current period. These matters were addressed in the context Basis for opinion of our audit of the standalone financial statements as a whole, and in forming our opinion thereon, and we do not We conducted our audit in accordance with the provide a separate opinion on these matters. Standards on Auditing (‘SAs’) specified under

Key audit matter How the matter was addressed in our audit Identification of Non-Performing Assets (‘NPAs’) and Provisions on Advances Charge: `20,836 million for year ended 31 March 2019 Provision: `33,977 million at 31 March 2019 Refer to the accounting policies in the Financial Statements: Significant Accounting Policies – use of estimates” and “Note 18.4.3 to the Financial Statements: Advances”

Annual Report 2018-19 185 Key audit matter How the matter was addressed in our audit Our key audit procedures included: Significant estimates and judgment involved Design/controls Identification of NPAs and provisions in respect of NPAs and restructured advances are made based on management’s Assessing the design, implementation and operating assessment of the degree of impairment of the advances effectiveness of key internal controls over approval, subject to and guided by the minimum provisioning recording and monitoring of loans, monitoring process levels prescribed under the RBI guidelines with regard of overdue loans (including those which became overdue to the Prudential Norms on Income Recognition, Asset subsequent to the reporting date), measurement of Classification & Provisioning, prescribed from time to time. provisions, identification of NPA accounts and assessing the reliability of management information The provision on NPA are also based on the valuation of the (including overdue reports). In addition, for corporate security available. In case of restructured accounts, provision loans we tested controls over the internal ratings process, is made for erosion/diminution in fair value of restructured monitoring of stressed accounts including credit file loans, in accordance with the RBI guidelines. In addition, the review processes and review controls over the approval of contingency provision that the Bank has established in the significant individual impairment provisions. current year on assets currently not classified as NPAs is based on management’s judgment. Evaluated the design, implementation and operating effectiveness of key internal controls over the valuation of We identified identification of NPAs and provision on security for NPAs and the key controls over determination advances as a key audit matter because of the level of of the contingency provision including documentation of management judgment involved in determining the provision the relevant approvals along with basis and rationale of the (including the provisions on assets which are not classified provision. as NPAs) and the valuation of the security of the NPA loans and on account of the significance to these estimates to the Testing of management review controls over measurement financial statements of the Bank. of provisions and disclosures in financial statements.

Involving our information system specialists in the audit of this area to gain comfort over data integrity and calculations, including system reconciliations.

Substantive tests

Test of details for a selection of exposures over calculation of NPA provisions including valuation of collaterals for NPAs as at 31 March 2019; the borrower-wise NPA identification and provisioning determined by the Bank and also testing related disclosures by assessing the completeness, accuracy and relevance of data and to ensure that the same is in compliance with the RBI guidelines with regard to the Prudential Norms on Income Recognition, Asset Classification & Provisioning.

We also selected a number of loans to test potential cases of loans repaid by a customer during the period by fresh disbursement(s) to these higher risk loans.

We selected a sample (based on quantitative and qualitative thresholds) of larger corporate clients where impairment indicators had been identified by management. We obtained management’s assessment of the recoverability of these exposures (including individual provisions calculations) and challenged whether individual impairment provisions, or lack of, were appropriate.

186 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

Key audit matter How the matter was addressed in our audit This included the following procedures:

Reviewing the statement of accounts, approval process, board minutes, credit review of customer, review of Special Mention Accounts reports and other related documents to assess recoverability and the classification of the facility; and

For a risk based sample of corporate loans not identified as displaying indicators of impairment by management, challenged this assessment by reviewing the historical performance of the customer and assessing whether any impairment indicators were present. Information technology IT systems and controls Our key IT audit procedures included:

The Bank’s key financial accounting and reporting processes We focused on user access management, change are highly dependent on information systems including management, segregation of duties, system reconciliation automated controls in systems, such that there exists a risk controls and system application controls over key financial that gaps in the IT control environment could result in the accounting and reporting systems. financial accounting and reporting records being misstated. Amongst, its multiple IT systems, five systems are key for its We tested a sample of key controls operating over the overall financial reporting. information technology in relation to financial accounting and reporting systems, including system access and system In addition, large transaction volumes and the increasing change management, program development and computer challenges to protect the integrity of the Bank’s systems and operations. data, cyber security has become a more significant risk in recent periods. We tested the design and operating effectiveness of key controls over user access management which includes We have identified ‘IT systems and controls’ as key audit granting access right, new user creation, removal of matter because of the high level automation, significant user rights and preventive controls designed to enforce number of systems being used by the management and the segregation of duties. complexity of the IT architecture. For a selected group of key controls over financial and reporting systems, we independently performed procedures to determine that these control remained unchanged during the year or were changed following the standard change management process.

Other areas that were assessed included password policies, security configurations, system interface controls, controls over changes to applications and databases and that business users and controls to ensure that developers and production support did not have access to change applications, the operating system or databases in the production environment.

Security configuration review and related tests on certain critical aspects of cyber security on network security management mechanism, operational security of key information infrastructure, data and client information management, monitoring and emergency management.

Annual Report 2018-19 187 Key audit matter How the matter was addressed in our audit Valuation of Financial Instruments (Investments and Derivatives) Refer to the accounting policies in the financial statements: "Significant Accounting Policies - use of estimate", “Note 18.4.2 to the Financial Statements: Investments” and “Note 18.4.6 to the Financial Statements: Accounting for derivative transactions” Subjective estimates and judgment involved Our key audit procedures included:

Investments Design/controls

Investments are classified into ‘Held for Trading’ (‘HFT’), Assessing the design, implementation and operating ‘Available for Sale’ (‘AFS’) and ‘Held to Maturity’ (‘HTM’) effectiveness of management’s key internal controls over categories at the time of purchase. Investments, which classification, valuation, and valuation models. the Bank intends to hold till maturity are classified as HTM investments. Reading investment agreements/term sheets entered into during the current year, on a sample basis, to understand Investments classified as HTM are carried at amortized cost. the relevant investment terms and identify any conditions Where, in the opinion of management, a diminution other that were relevant to the valuation of financial instruments. than temporary, in the value of investments has taken place, appropriate provisions are required to be made. Investments classified as AFS and HFT are marked-to-market Engaging our valuation specialists to assist us in evaluating on a periodic basis as per the relevant RBI guidelines. the valuation models used by the Bank to value certain instruments and to perform, on a sample basis, independent We identified valuation of investments as a key audit valuations of the instruments and comparing these matter because of the management judgment involved in valuations with the Bank’s valuations. determining the value of certain investments (Bonds and Debentures, Commercial papers and Certificate of deposits, Assessed the appropriateness of the valuation methodology security receipts) based on the policy and model developed and challenging the valuation model by testing the key by the Bank, impairment assessment for HTM book and the inputs used such as pricing inputs, measure of volatility and overall significant investments to the financial statements of discount factors. Compared the valuation methodology to the Bank. criteria in the accounting standards/RBI guidelines.

Derivatives Substantive tests

The Bank has exposure to derivative products which are For sample of instruments we re-performed independent accounted for on fair value (mark-to-market) in the books of valuation where no direct observable inputs were used. account. We examined and challenged the assumptions used, by considering the alternate valuation method and sensitivity The valuation of the Bank’s derivatives, held at fair value, is of other key factors based on a combination of market data and valuation models which often require a considerable number of inputs. Many Assessing whether the financial statement disclosures of these inputs are obtained from readily available data, the appropriately reflect the Bank’s exposure to investments valuation techniques for which use quoted market prices and derivatives valuation risks with reference to the and observable inputs. Where such observable data is not requirements of the prevailing accounting standards and readily available, then estimates are developed which can RBI guidelines. involve significant management judgment.

We identified assessing the fair value of derivatives as a key audit matter because of the degree of complexity involved in valuing certain financial instruments and the degree of judgment exercised by management in identifying the valuation models and determining the inputs used in the valuation models.

188 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

INFORMATION OTHER that give a true and fair view and are free from material THAN THE STANDALONE misstatement, whether due to fraud or error.

FINANCIAL STATEMENTS AND In preparing the standalone financial statements, AUDITOR’S REPORT THEREON management and the Board of Directors are responsible for assessing the Bank’s ability to continue as a going The Bank’s Management and Board of Directors concern, disclosing, as applicable, matters related are responsible for the other information. The other to going concern and using the going concern basis information comprises the information included in the of accounting unless management either intends to Bank’s Annual report, but does not include the standalone liquidate the Bank or to cease operations, or has no financial statements and our auditor’s report thereon. realistic alternative but to do so. Our opinion on the standalone financial statements does The Board of Directors are also responsible for overseeing not cover the other information and we will not express the Bank’s financial reporting process. any form of assurance conclusion thereon.

In connection with our audit of the standalone financial AUDITOR’S RESPONSIBILITIES FOR statements, our responsibility is to read the other THE AUDIT OF THE STANDALONE information and, in doing so, consider whether the other information is materially inconsistent with the standalone FINANCIAL STATEMENTS financial statements or our knowledge obtained in the Our objectives are to obtain reasonable assurance about audit or otherwise appears to be materially misstated. whether the standalone financial statements as a whole If, based on the work we have performed, we conclude are free from material misstatement, whether due to fraud that there is a material misstatement of this other or error, and to issue an auditor’s report that includes information, we are required to report that fact. We have our opinion. Reasonable assurance is a high level of nothing to report in this regard. assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material RESPONSIBILITIES OF misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually MANAGEMENT AND THOSE or in the aggregate, they could reasonably be expected CHARGED WITH GOVERNANCE to influence the economic decisions of users taken on the FOR THE STANDALONE basis of these standalone financial statements. FINANCIAL STATEMENTS As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional The Bank’s management and Board of Directors are skepticism throughout the audit. We also: responsible for the matters stated in Section 134 (5) ▲▲ Identify and assess the risks of material misstatement of the Act with respect to the preparation of these of the standalone financial statements, whether standalone financial statements that give a true and due to fraud or error, design and perform audit fair view of the state of affairs, profit and cash flows of procedures responsive to those risks, and obtain the Bank in accordance with the accounting principles audit evidence that is sufficient and appropriate generally accepted in India, including the Accounting to provide a basis for our opinion. The risk of not Standards specified under Section 133 of the Act, detecting a material misstatement resulting from provisions of Section 29 of the Banking Regulation Act, fraud is higher than for one resulting from error, 1949 and the circulars and guidelines issued by Reserve as fraud may involve collusion, forgery, intentional Bank of India (‘RBI’) from time to time. This responsibility omissions, misrepresentations, or the override of also includes maintenance of adequate accounting internal control. records in accordance with the provisions of the Act for safeguarding of the assets of the Bank and for preventing ▲ Obtain an understanding of internal control relevant and detecting frauds and other irregularities; selection to the audit in order to design audit procedures and application of appropriate accounting policies; that are appropriate in the circumstances. Under making judgments and estimates that are reasonable and Section 143(3)(i) of the Act, we are also responsible prudent; and design, implementation and maintenance of for expressing our opinion on whether the Bank has adequate internal financial controls, that were operating adequate internal financial controls with refrence to effectively for ensuring the accuracy and completeness the standalone financial statement in place and the of the accounting records, relevant to the preparation operating effectiveness of such controls. and presentation of the standalone financial statements

Annual Report 2018-19 189 ▲ Evaluate the appropriateness of accounting policies REPORT ON OTHER LEGAL AND used and the reasonableness of accounting REGULATORY REQUIREMENTS estimates and related disclosures made by management. The balance sheet and the profit and loss account have been drawn up in accordance with the provisions ▲ Conclude on the appropriateness of management’s of Section 29 of the Banking Regulation Act, 1949 and use of the going concern basis of accounting and, Section 133 of the Act. based on the audit evidence obtained, whether a material uncertainty exists related to events or (A) As required by sub-section (3) of Section 30 of the conditions that may cast significant doubt on the Banking Regulation Act, 1949, we report that: Bank’s ability to continue as a going concern. If we (a) we have obtained all the information and conclude that a material uncertainty exists, we are explanations which, to the best of our required to draw attention in our auditor’s report to knowledge and belief, were necessary for the the related disclosures in the standalone financial purpose of our audit and have found them to statements or, if such disclosures are inadequate, be satisfactory; to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of (b) the transactions of the Bank, which have come our auditor’s report. However, future events or to our notice, have been within the powers conditions may cause a bank to cease to continue of the Bank; and as a going concern. (c) since the key operations of the Bank are ▲ Evaluate the overall presentation, structure and automated with the key applications integrated content of the standalone financial statements, to the core banking systems, the audit is carried including the disclosures, and whether the out centrally as all the necessary records and standalone financial statements represent the data required for the purposes of our audit are underlying transactions and events in a manner that available therein. However, during the course achieves fair presentation. of our audit we have visited 22 branches. We communicate with those charged with governance (B) Further, as required by Section 143(3) of the Act, regarding, among other matters, the planned scope and we report that: timing of the audit and significant audit findings, including (a) we have sought and obtained all the any significant deficiencies in internal control that we information and explanations which to the best identify during our audit. of our knowledge and belief were necessary for the purpose of our audit; We also provide those charged with governance with a statement that we have complied with relevant (b) in our opinion, proper books of account as ethical requirements regarding independence, and required by law have been kept by the Bank to communicate with them all relationships and other so far as it appears from our examination matters that may reasonably be thought to bear on our of those books; independence, and where applicable, related safeguards. (c) the standalone balance sheet, the standalone profit and loss account, and the standalone From the matters communicated with those charged cash flow statement dealt with by this Report with governance, we determine those matters that are in agreement with the books of account; were of most significance in the audit of the standalone financial statements of the current period and are (d) in our opinion, the aforesaid standalone therefore the key audit matters. We describe these financial statements comply with the matters in our auditor’s report unless law or regulation Accounting Standards specified under Section precludes public disclosure about the matter or when, in 133 of the Act, to the extent they are not extremely rare circumstances, we determine that a matter inconsistent with the accounting policies should not be communicated in our report because the prescribed by RBI; adverse consequences of doing so would reasonably (e) on the basis of the written representations be expected to outweigh the public interest benefits of received from the directors as on 31 such communication. March 2019 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2019 from being appointed as a director in terms of Section 164 (2) of the Act;

190 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

(f) with respect to the adequacy of the internal iii. there has been no delay in transferring financial controls over financial reporting of amounts, required to be transferred, to the Bank and the operating effectiveness of the Investor Education and Protection such controls, refer to our separate Report in Fund by the Bank. ‘Annexure A’; and (h) The disclosures required on holdings as well (g) with respect to the other matters to be as dealing in specified bank notes during included in the Auditor’s Report in accordance the period from 8 November 2016 to 30 with Rule 11 of the Companies (Audit and December 2016 as envisaged in notification Auditors) Rules, 2014, in our opinion and to G.S.R. 308(E) dated 30 March 2017 issued the best of our information and according to by the Ministry of Corporate Affairs is not the explanations given to us: applicable to the Bank i. the Bank has disclosed the impact of (C) With respect to the matter to be included in the pending litigations as at 31 March 2019 Auditors’ Report under Section 197(16): on its financial position in its standalone The Bank is a banking company as defined under financial statements – Refer Schedule Banking Regulation Act, 1949. Accordingly, the 12 and Note 18.7.18 to the standalone requirements prescribed under Section 197 of the financial statements; Companies Act, 2013 do not apply ii. the Bank has made provision, as required under the applicable law or For B S R & Co. LLP accounting standards, for material Chartered Accountants foreseeable losses, if any, on long-term Firm’s Registration No: 101248W/W-100022 contracts including derivative contracts – Refer Note 18.7.15 to the standalone Venkataramanan Vishwanath financial statements; Mumbai Partner April 26, 2019 Membership No: 113156

Annual Report 2018-19 191 Annexure A to the Independent Auditor’s Report of even date on the Standalone Financial Statements of YES BANK Limited for the year ended 31 March 2019

Report on the Internal Financial Controls with reference AUDITOR’S RESPONSIBILITY to the aforesaid standalone financial statements Our responsibility is to express an opinion on the Bank’s under Clause (i) of sub-section 3 of Section 143 of the internal financial controls with reference to financial Companies Act, 2013 (“the Act”) statements based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards (Referred to in paragraph (B)(f) under ‘Report on Other on Auditing, prescribed under Section 143(10) of Legal and Regulatory Requirements’ Section of our the Act, to the extent applicable to an audit of internal report of even date) financial controls with reference to financial statements. Those Standards and the Guidance Note require that we OPINION comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether We have audited the internal financial controls with adequate internal financial controls with reference to reference to financial statements of YES BANK Limited financial statements were established and maintained (“the Bank”) as of 31 March 2019 in conjunction with our and whether such controls operated effectively in all audit of the standalone financial statements of the Bank material respects. for the year ended on that date. Our audit involves performing procedures to obtain audit In our opinion, the Bank has, in all material respects, evidence about the adequacy of the internal financial adequate internal financial controls with reference to controls with reference to financial statements and their financial statements and such internal financial controls operating effectiveness. Our audit of internal financial were operating effectively as at 31 March 2019, based on controls with reference to financial statements included the internal financial controls with reference to financial obtaining an understanding of internal financial controls, statements criteria established by the Bank considering assessing the risk that a material weakness exists, the essential components of internal control stated in the and testing and evaluating the design and operating Guidance Note on Audit of Internal Financial Controls effectiveness of internal control based on the assessed Over Financial Reporting issued by the Institute of risk. The procedures selected depend on the auditor’s Chartered Accountants of India (the “Guidance Note”). judgment, including the assessment of the risks of material misstatement of the standalone financial statements, MANAGEMENT’S whether due to fraud or error. RESPONSIBILITY FOR INTERNAL We believe that the audit evidence we have obtained is FINANCIAL CONTROLS sufficient and appropriate to provide a basis for our audit The Bank’s management and Board of Directors are opinion on the Bank’s internal financial controls with responsible for establishing and maintaining internal reference to financial statements. financial controls based on the internal financial control with reference to financial statement criteria established MEANING OF INTERNAL FINANCIAL by the Bank considering the essential components of internal control stated in the Guidance Note. CONTROLS WITH REFERENCE TO These responsibilities include the design, implementation FINANCIAL STATEMENTS and maintenance of adequate internal financial controls A company’s internal financial controls with reference that were operating effectively for ensuring the orderly to financial statements is a process designed to provide and efficient conduct of its business, including adherence reasonable assurance regarding the reliability of financial to the Bank’s policies, the safeguarding of its assets, reporting and the preparation of standalone financial the prevention and detection of frauds and errors, the statements for external purposes in accordance with accuracy and completeness of the accounting records, generally accepted accounting principles. A company’s and the timely preparation of reliable financial information, internal financial control with reference to financial as required under the Companies Act, 2013 (“the Act”).

192 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

statement includes those policies and procedures that (1) the possibility of collusion or improper management pertain to the maintenance of records that, in reasonable override of controls, material misstatements due detail, accurately and fairly reflect the transactions and to error or fraud may occur and not be detected. dispositions of the assets of the company; (2) provide Also, projections of any evaluation of the internal financial reasonable assurance that transactions are recorded as controls with reference to financial statements to future necessary to permit preparation of financial statements in periods are subject to the risk that the internal financial accordance with generally accepted accounting principles, control with reference to financial statement become and that receipts and expenditures of the company are inadequate because of changes in conditions, or that the being made only in accordance with authorizations of degree of compliance with the policies or procedures management and directors of the company; and (3) may deteriorate. provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or For B S R & Co. LLP disposition of the company’s assets that could have a Chartered Accountants material effect on the standalone financial statements. Firm’s Registration No: 101248W/W-100022

INHERENT LIMITATIONS Venkataramanan Vishwanath Mumbai Partner OF INTERNAL FINANCIAL April 26, 2019 Membership No: 113156 CONTROLS WITH REFERENCE TO FINANCIAL STATEMENTS Because of the inherent limitations of internal financial controls with reference to financial statements, including

Annual Report 2018-19 193 Standalone Balance Sheet as at March 31, 2019

(` in thousands) As at As at Schedule March 31, 2019 March 31, 2018 Capital and Liabilities Capital 1 4,630,066 4,605,934 Reserves and surplus 2 264,411,895 252,976,864 Deposits 3 2,276,101,818 2,007,381,476 Borrowings 4 1,084,241,089 748,935,808 Other liabilities and provisions 5 178,876,786 110,555,951 TOTAL 3,808,261,654 3,124,456,033 Assets Cash and balances with Reserve Bank of India 6 107,977,369 114,257,489 Balances with banks and money at call and short notice 7 160,917,748 133,086,175 Investments 8 895,220,327 683,989,387 Advances 9 2,414,996,024 2,035,338,628 Fixed assets 10 8,169,955 8,323,917 Other assets 11 220,980,231 149,460,437 TOTAL 3,808,261,654 3,124,456,033 Contingent liabilities 12 6,541,580,198 5,818,296,390 Bills for collection 50,592,373 19,355,641 Significant Accounting Policies and Notes to Accounts forming 18 part of financial statements

As per our report of even date attached.

For B S R & Co. LLP For and on behalf of the Board of Directors Chartered Accountants YES BANK Limited Firm’s Registration No: 101248W/W-100022

Venkataramanan Vishwanath Ravneet Gill Brahm Dutt Ajai Kumar Partner Managing Director & CEO Chairman Director Membership No: 113156 (DIN: 00091746) (DIN: 05308908) (DIN: 02446976)

Uttam Prakash Agarwal Raj Ahuja Shivanand R. Shettigar Director Group Chief Financial Group Company (DIN: 00272983) Officer Secretary Mumbai April 26, 2019

194 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

Standalone Profit and Loss for the year ended March 31, 2019

(` in thousands) For the year ended For the year ended Schedule March 31, 2019 March 31, 2018 I. Income Interest earned 13 296,247,473 202,674,216 Other income 14 45,901,526 52,238,335 TOTAL 342,148,999 254,912,551 II. Expenditure Interest expended 15 198,157,160 125,303,624 Operating expenses 16 62,642,768 52,127,798 Provisions and contingencies 17 64,146,283 35,235,492 TOTAL 324,946,211 212,666,914 III. Profit Net profit for the year 17,202,788 42,245,637 Profit brought forward 103,753,016 79,333,915 TOTAL 120,955,804 121,579,552 IV. Appropriations Transfer to Statutory Reserve 4,300,697 10,561,409 Transfer to Capital Reserve 1,010,096 659,648 Transfer to Investment Reserve 6,707 - Transfer to Investment Fluctuation Reserve 539,066 - Dividend paid (Refer Sch. 18.5.1.2) 6,223,989 5,488,101 Tax on Dividend paid (Refer Sch. 18.5.1.2) 1,279,652 1,117,377 Balance carried over to balance sheet 107,595,597 103,753,016 TOTAL 120,955,804 121,579,552 Significant Accounting Policies and Notes to Accounts 18 forming part of financial statements Earning per share (Refer Sch. 18.6.16) Basic (`) 7.45 18.43 Diluted (`) 7.38 18.06 (Face Value of Equity Share is `2/-)

As per our report of even date attached.

For B S R & Co. LLP For and on behalf of the Board of Directors Chartered Accountants YES BANK Limited Firm’s Registration No: 101248W/W-100022

Venkataramanan Vishwanath Ravneet Gill Brahm Dutt Ajai Kumar Partner Managing Director & CEO Chairman Director Membership No: 113156 (DIN: 00091746) (DIN: 05308908) (DIN: 02446976)

Uttam Prakash Agarwal Raj Ahuja Shivanand R. Shettigar Director Group Chief Financial Group Company (DIN: 00272983) Officer Secretary Mumbai April 26, 2019

Annual Report 2018-19 195 Standalone Cash Flow Statement for the year ended March 31, 2019

(` in thousands) Year ended Year ended March 31, 2019 March 31, 2018 Cash flow from Operating Activities Net profit before taxes 23,573,471 61,943,094 Adjustment for Depreciation for the year 3,015,420 2,309,704 Amortization of premium on investments 2,102,585 1,673,308 Provision for investments 6,824,889 2,599,443 Provision for standard advances 22,514,059 1,687,427 Provision/write-off of non-performing advances 25,669,535 10,788,287 Other provisions 2,767,116 397,075 (Profit)/Loss on sale of land, building and other assets (3,947) 12,892 (i) 86,463,128 81,411,230 Adjustments for : Increase/(Decrease) in Deposits 268,720,342 578,642,909 Increase/(Decrease) in Other Liabilities 38,016,714 (1,384,431) (Increase)/Decrease in Investments (160,198,010) (104,836,672) (Increase)/Decrease in Advances (405,326,931) (725,187,573) (Increase)/Decrease in Other assets (48,182,922) (24,532,910) (ii) (306,970,807) (277,298,677) Payment of direct taxes (iii) (26,103,985) (22,889,711) Net cash generated from/(used in) operating activities (A) (i+ii+iii) (246,611,664) (218,777,158) Cash flow from investing activities Purchase of fixed assets (2,912,885) (3,900,382) Proceeds from sale of fixed assets 55,372 89,251 Investment in subsidiaries (1,185,000) (555,000) (Increase)/Decrease in Held To Maturity (HTM) securities (58,775,403) (82,552,484) Net cash generated/(used in) from investing activities (B) (62,817,916) (86,918,615)

196 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

Standalone Cash Flow Statement for the year ended March 31, 2019

(` in thousands) Year ended Year ended March 31, 2019 March 31, 2018 Cash flow from financing activities Increase in Borrowings 313,708,193 241,003,504 Tier II Debt raised 30,420,000 70,000,000 Innovative Perpetual Debt (paid)/raised (1,754,400) 54,150,000 Tier II Debt repaid during the year (5,430,400) (2,489,000) Proceeds from issue of Share Capital (net of share issue expense) 953,472 1,420,167 Dividend paid during the year (6,223,989) (5,488,101) Tax on dividend paid (1,279,652) (1,117,377) Net cash generated from/(used in) financing activities (C) 330,393,224 357,479,193 Effect of exchange fluctuation on translation reserve (D) 587,809 65,803 Net increase in cash and cash equivalents (A+B+C+D) 21,551,453 51,849,223 Cash and cash equivalents as at April 1st 247,343,664 195,494,441 Cash and cash equivalents as at March 31st 268,895,117 247,343,664 Notes to the Cash flow statement: Cash and cash equivalents includes the following: Cash and Balances with Reserve Bank of India 107,977,369 114,257,489 Balances with Banks and Money at Call and Short Notice 160,917,748 133,086,175 Cash and cash equivalents as at March 31st 268,895,117 247,343,664

As per our report of even date attached.

For B S R & Co. LLP For and on behalf of the Board of Directors Chartered Accountants YES BANK Limited Firm’s Registration No: 101248W/W-100022

Venkataramanan Vishwanath Ravneet Gill Brahm Dutt Ajai Kumar Partner Managing Director & CEO Chairman Director Membership No: 113156 (DIN: 00091746) (DIN: 05308908) (DIN: 02446976)

Uttam Prakash Agarwal Raj Ahuja Shivanand R. Shettigar Director Group Chief Financial Group Company (DIN: 00272983) Officer Secretary Mumbai April 26, 2019

Annual Report 2018-19 197 Schedules forming part of Financial Statements

(` in thousands) As at As at March 31, 2019 March 31, 2018 Schedule 1 - Capital Authorized Capital 3,000,000,000 equity shares of `2/- each 6,000,000 6,000,000 20,000,000 preference shares of `100/- each 2,000,000 2,000,000 Issued, subscribed and paid-up capital 2,315,033,039 equity shares of `2/- each 4,630,066 4,605,934 (March 31, 2018 : 2,302,967,245 equity shares of `2/- each) [Refer Sch 18.5.1.1] TOTAL 4,630,066 4,605,934

(` in thousands) As at As at March 31, 2019 March 31, 2018 Schedule 2 - Reserves and Surplus I. Statutory Reserves Opening balance 44,633,403 34,071,994 Additions during the year 4,300,697 10,561,409 Deductions during the year - - Closing balance 48,934,100 44,633,403 II. Share Premium Opening balance 100,058,339 98,679,248 Additions during the year [Refer Sch 18.5.1.1] 929,340 1,379,091 Deductions during the year - - Closing balance 100,987,679 100,058,339 III. Capital Reserve Opening balance 4,524,481 3,864,833 Additions during the year [Refer Sch 18.5.1.3] 1,010,096 659,648 Deductions during the year - - Closing balance 5,534,577 4,524,481 IV. Investment Reserve Opening balance 226,197 226,197 Additions during the year [Refer Sch 18.5.1.4] 6,707 - Deductions during the year - - Closing balance 232,904 226,197 V. Foreign Currency Translation Reserve Opening balance 25,486 (40,317) Additions during the year 587,809 65,803 Deductions during the year - - Closing balance 613,295 25,486 VI. Cash Flow Hedge Reserve Opening balance (244,057) (160,135) Additions during the year [Refer Sch 18.5.1.5] 218,734 (83,922) Deductions during the year - - Closing balance (25,323) (244,057) VII. Investment Fluctuation Reserve Opening balance - - Additions during the year [Refer Sch 18.5.1.6] 539,066 - Deductions during the year - - Closing balance 539,066 - VIII. Balance in Profit and Loss Account 107,595,597 103,753,016 TOTAL 264,411,895 252,976,864

198 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

Schedules forming part of Financial Statements

(` in thousands) As at As at March 31, 2019 March 31, 2018 Schedule 3 - Deposits A. I. Demand Deposits i) From Banks 17,301,403 14,602,217 ii) From Others 268,119,467 273,655,030 II. Savings Bank Deposit 467,112,348 443,504,509 III. Term Deposits i) From banks 184,849,906 112,971,241 ii) From others (incl. CD's issued) 1,338,718,694 1,162,648,479 TOTAL 2,276,101,818 2,007,381,476 B. I. Deposits of branches in India 2,274,954,791 2,006,449,601 II. Deposits of branches outside India 1,147,027 931,875 TOTAL 2,276,101,818 2,007,381,476

(` in thousands) As at As at March 31, 2019 March 31, 2018 Schedule 4 - Borrowings I. Innovative Perpetual Debt Instruments (IPDI) and Tier II Debt A. Borrowing in India i) IPDI 90,020,000 91,560,000 ii) Tier II Borrowings 180,759,000 152,339,000 TOTAL (A) 270,779,000 243,899,000 B. Borrowings outside India i) IPDI - 325,875 ii) Tier II Borrowings 6,215,786 11,172,824 TOTAL (B) 6,215,786 11,498,699 TOTAL (A+B) 276,994,786 255,397,699 II. Other Borrowings(1) A. Borrowings in India i) Reserve Bank of India - 15,000,000 ii) Other banks 57,147,925 15,811,399 iii) Other institutions and agencies(2) 345,669,057 187,167,910 TOTAL (A) 402,816,982 217,979,309 B. Borrowings outside India(3) 404,429,321 275,558,800 TOTAL (A+B) 807,246,303 493,538,109 TOTAL (I+II) 1,084,241,089 748,935,808

(1) Secured borrowings are `4,996,813 thousands (March 31, 2018: `46,463,203 thousands). (2) Including `302,872,244 thousands of refinance borrowing (March 31, 2018:` 123,216,106 thousands) `16,450,000 thousands (March 31, 2018: `16,450,000 thousands) of Green Infrastructure Bonds raised to fund 'Green Projects' and `21,350,000 thousands (March 31, 2018: `21,350,000 thousands) of Long-Term Infrastructure Bonds raised to finance affordable housing and infrastructure projects. (3) Includes bonds of `32,909,865 thousand (March 31, 2018: `38,974,842 thousands) of Medium-Term Notes issued from International Business Unit (IBU) in GIFT city Gujarat to fund its growth.

Annual Report 2018-19 199 Schedules forming part of Financial Statements

(` in thousands) As at As at March 31, 2019 March 31, 2018 Schedule 5 - Other Liabilities and Provisions I. Bills payable 3,913,805 9,151,490 II. Inter-office adjustments (net) - - III. Interest accrued 37,455,379 21,932,830 IV. Others (including provisions) - Provision for standard advances 32,007,968 9,493,909 - Country risk provision 532,784 - - Others 104,966,850 69,977,722 TOTAL 178,876,786 110,555,951

(` in thousands) As at As at March 31, 2019 March 31, 2018 Schedule 6 - Cash and Balances with Reserve Bank of India I. Cash in hand 6,333,912 6,226,739 II. Balances with Reserve Bank of India - In current account 101,643,457 108,030,750 - In other account - - TOTAL 107,977,369 114,257,489

(` in thousands) As at As at March 31, 2019 March 31, 2018 Schedule 7 - Balances with Banks and Money at Call and Short Notice I. In India Balances with banks i) In current accounts 1,988,954 781,586 ii) In other deposit accounts 5,089 83 Money at call and short notice i) With Banks - - ii) With other institutions - - iii) Lending under reverse repo (RBI & Banks) 88,310,161 112,009,654 TOTAL (I) 90,304,204 112,791,323 II. Outside India i) In current account 39,148,020 14,494,277 ii) In other deposit account - - iii) Money at call and short notice 31,465,525 5,800,575 TOTAL (II) 70,613,545 20,294,852 TOTAL (I+II) 160,917,748 133,086,175

200 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

Schedules forming part of Financial Statements

(` in thousands) As at As at March 31, 2019 March 31, 2018 Schedule 8 - Investments (Net of Provisions) A. Investments in India i) Government Securities 553,611,120 488,860,831 ii) Other approved securities - - iii) Shares 429,168 643,782 iv) Debentures and bonds 154,985,441 145,045,609 v) Subsidiaries and/or joint ventures 2,240,000 1,055,000 vi) Others (CPs, CDs, Security Receipts, Pass through certificates 60,825,681 38,030,003 etc.) TOTAL (I) 772,091,410 673,635,225 B. Investments outside India i) Government Securities 120,595,843 3,445,612 ii) Shares 9,421 - iii) Debentures and bonds 2,523,653 6,908,550 TOTAL (II) 123,128,917 10,354,162 TOTAL (I+II) 895,220,327 683,989,387

(` in thousands) As at As at March 31, 2019 March 31, 2018 Schedule 9 - Advances A. i) Bills purchased and discounted 42,078,951 39,543,292 ii) Cash credit, overdrafts and loans payable on demand 412,651,470 349,496,606 iii) Term loans 1,960,265,603 1,646,298,730 TOTAL 2,414,996,024 2,035,338,628 i) Secured by tangible assets (includes advances secured by fixed 1,961,505,002 1,477,676,098 B. deposits and book debt) ii) Covered by Bank/Government guarantees 10,366,160 5,996,099 iii) Unsecured(1) 443,124,862 551,666,431 TOTAL 2,414,996,024 2,035,338,628 1Includes advances of `128,510,880 thousands (March 31, 2018: `337,552,952 thousands) for which security documentation is either being obtained or being registered. As at March 31, 2019 advances amounting to `2,403,000 thousands (March 31, 2018: Nil) has been secured by intangible securities such as charge over the rights, licenses, authority, etc. C. I. Advances in India i) Priority sectors 539,338,050 446,472,144 ii) Public sector 56,671 1,524,237 iii) Banks 674,817 1,214,227 iv) Others 1,686,228,220 1,442,062,406 TOTAL (I) 2,226,297,758 1,891,273,014 II. Advances outside India i) Due from Banks 431,707 1,716,986 ii) Due from Others 188,266,559 142,348,628 (a) Bills purchased and discounted - - (b) Syndicated and Term loans 30,796,065 142,348,628 (c) Others 157,470,494 - TOTAL (II) 188,698,266 144,065,614 TOTAL (I+II) 2,414,996,024 2,035,338,628

Annual Report 2018-19 201 Schedules forming part of Financial Statements

(` in thousands) As at As at March 31, 2019 March 31, 2018 Schedule 10 - Fixed Assets I. Premises At cost as on March 31st of preceding year 378,031 378,031 Additions during the year - - Deductions during the year - - Accumulated depreciation to date (14,704) (8,402) TOTAL (I) 363,327 369,629 II. Other Fixed Assets (including furniture and fixtures and software) At cost as on March 31st of preceding year 15,232,744 11,745,713 Additions during the year 3,133,713 3,931,501 Deductions during the year (257,697) (444,470) Accumulated depreciation to date (10,801,920) (7,994,083) TOTAL (II) 7,306,840 7,238,661 TOTAL (I+II) 7,670,167 7,608,290 Capital work-in-progress 499,788 715,627 TOTAL 8,169,955 8,323,917

(` in thousands) As at As at March 31, 2019 March 31, 2018 Schedule 11 - Other Assets I. Interest Accrued 39,033,483 25,152,344 II. Advance tax and tax deducted at source (net of provision) 4,801,326 1,674,968 III. Deferred tax asset [Refer Sch 18.6.27] 25,329,143 8,717,588 IV. Non-Banking assets aquired in satisfaction of claims 353,000 364,790 V. Others 151,463,279 113,550,747 TOTAL 220,980,231 149,460,437

(` in thousands) As at As at March 31, 2019 March 31, 2018 Schedule 12 - Contingent Liabilities I. Claims against the bank not acknowledged as debts 549,157 116,436 II. Liability for partly paid investments - - III. Liability on account of outstanding forward exchange contracts 2,834,098,764 3,000,448,825 IV. Liability on account of outstanding derivative contracts - Single currency Interest Rate Swap 1,702,671,190 1,141,440,348 - Others 868,291,165 783,747,908

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(` in thousands) As at As at March 31, 2019 March 31, 2018 V. Guarantees given on behalf on constituents - In India 437,258,909 314,307,933 - Outside India - - VI. Acceptances, endorsement and other obligations 390,140,737 411,689,385 VII. Other items for which the bank is contingently liable - Purchase of securities pending settlement 3,622,750 9,068,982 - Capital commitment 2,937,672 2,936,618 - Amount deposited with RBI under Depositor Education and 32,834 13,533 Awareness Fund (DEAF) - Foreign exchange contracts (Tom & Spot) 300,477,020 154,526,423 - Bills Re-discounting 1,500,000 - TOTAL 6,541,580,198 5,818,296,390

Contingent Liability on account of outstanding forward exchange contracts and single currency interest rate swap as on March 31, 2019 includes notional amount of `2,035,934,447 thousands and `407,303,929 thousands (previous year: `2,315,099,034 thousands and `318,672,816 thousands) guaranteed by CCIL representing 71.84% and 23.92% (previous year: 77.16% and 27.92%) of total outstanding forward exchange contracts and single currency interest rate swaps respectively. (` in thousands) For the year ended For the year ended March 31, 2019 March 31, 2018 Schedule 13 - Interest Earned I. Interest/discount on advances/bills 229,226,405 154,782,364 II. Income on investments 60,484,215 41,025,311 Interest on balances with Reserve Bank of India and 3,975,738 5,160,730 III. other inter-bank funds IV. Others 2,561,115 1,705,811 TOTAL 296,247,473 202,674,216

(` in thousands) For the year ended For the year ended March 31, 2019 March 31, 2018 Schedule 14 - Other Income I. Commission, exchange and brokerage 36,361,452 41,379,643 II. Profit on the sale of investments (net) 3,174,838 5,134,739 III. Profit/(Loss) on the revaluation of investments (net) - - IV. Profit/(Loss) on sale of land, building and other assets 3,947 (12,892) V. Profit on exchange transactions (net) 1,570,297 2,315,709 Income earned by way of dividends etc. from subsidiaries, companies - - VI. and/or joint ventures abroad/in India VII. Miscellaneous income 4,790,992 3,421,136 TOTAL 45,901,526 52,238,335

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(` in thousands) For the year ended For the year ended March 31, 2019 March 31, 2018 Schedule 15 - Interest Expended I. Interest on deposits 136,871,140 93,834,137 Interest on Reserve Bank of India/ inter-bank borrowings/ Tier I and 60,764,723 29,840,501 II. Tier II debt instruments III. Others 521,297 1,628,986 TOTAL 198,157,160 125,303,624

(` in thousands) For the year ended For the year ended March 31, 2019 March 31, 2018 Schedule 16 - Operating Expenses I. Payments to and provisions for employees 24,697,653 21,889,199 II. Rent, taxes and lighting 4,173,931 4,543,758 III. Printing and stationery 423,256 368,753 IV. Advertisement and publicity 648,283 959,102 V. Depreciation on Bank's property 3,015,420 2,309,704 VI. Directors' fees, allowances and expenses 43,413 19,848 VII. Auditors' fees and expenses 23,203 13,685 VIII. Law charges 90,931 60,940 IX. Postage, telegrams, telephones, etc. 647,585 604,220 X. Repairs and maintenance 420,294 345,426 XI. Insurance 2,078,487 1,512,106 XII. Other expenditure 26,380,312 19,501,057 TOTAL 62,642,768 52,127,798

(` in thousands) For the year ended For the year ended March 31, 2019 March 31, 2018 Schedule 17 - Provisions & Contingencies I. Provision for taxation [Refer Sch 18.6.10] 6,370,684 19,697,457 II. Provision for investments 6,824,889 2,599,443 III. Provision for standard advances 22,514,059 1,687,427 IV. Provision/write-off for non-performing advances 25,669,535 10,788,287 V. Other Provisions 2,767,116 462,878 TOTAL 64,146,283 35,235,492

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18. SIGNIFICANT ACCOUNTING POLICIES AND NOTES FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2019 18.1 Background could differ from these estimates. Any revision to accounting estimates is recognized prospectively in YES BANK Limited (the ‘Bank’ or ‘YES BANK’) is a private current and future periods. sector bank promoted by the late Mr. Ashok Kapur and Mr. Rana Kapoor. YES BANK is a publicly held bank engaged in providing a wide range of banking and 18.4 Significant accounting policies financial services. YES BANK is a banking company 18.4.1 Revenue recognition governed by the Banking Regulation Act, 1949. The Bank was incorporated as a limited company under Revenue is recognized to the extent it is probable that the the Companies Act, 1956 on November 21, 2003. economic benefits will flow to the Bank and the revenue The Bank received the licence to commence banking can be reliably measured. operations from the Reserve Bank of India (‘RBI’) on ▲▲ Interest income is recognized in the profit and loss May 24, 2004. Further, YES BANK was included to the account on accrual basis, except in the case of non- Second Schedule of the Reserve Bank of India Act, performing assets and accounts under SDR / S4A. 1934 with effect from August 21, 2004. Also the Bank Interest on non-performing assets and accounts has a branch at International Financial Services Centre under SDR / S4A is recognized as per the prudential (‘IFSC’) at GIFT City, Gujarat (‘IBU’). The Bank classifies norms of the RBI. Penal Interest is recognized upon transactions undertaken by IBU as overseas operation. certainty of its realization. 18.2 Basis of preparation ▲▲ Dividend income is recognized when the right to receive payment is established. The financial statements have been prepared in ▲▲ Commission on guarantees issued by the Bank accordance with requirements prescribed under the Third is recognized as income over the period of the Schedule (Form A and Form B) of the Banking Regulation guarantee. Act, 1949. The accounting and reporting policies of the Bank used in the preparation of these financial ▲▲ Commission on Letters of Credit (‘LC’) issued by the statements conform to Generally Accepted Accounting Bank is recognized as income at the time of issue Principles in India (Indian GAAP), the guidelines issued of the LC. by the Reserve Bank of India (RBI) from time to time, the ▲▲ Income on non-coupon bearing discounted accounting standards notified under Section 133 of the instruments is recognized over the tenure of the Companies Act, 2013, read together with paragraph 7 of instrument on a straight-line basis. In case of coupon the Companies (Accounts) Rules 2014 and Companies bearing discounted instruments, discount income is (Accounting Standards) Amendment Rules, 2016 to the recognized over the tenor of the instrument on yield extent applicable and practices generally prevalent in the basis. banking industry in India. The Bank follows the accrual method of accounting and the historical cost convention, ▲▲ In case of Bonds and Pass Through Certificates unless otherwise stated by RBI guidelines. (PTC), premium on redemption, if any, is amortized over the tenure of the instrument on a yield basis. 18.3 Use of estimates ▲▲ Revenue from financial advisory services is recognized in line with milestones achieved as per The preparation of financial statements requires the terms of agreement with clients which is reflective of management to make estimates and assumptions that services rendered. are considered while reporting amounts of assets and liabilities (including contingent liabilities) as of the date ▲▲ Facility fees and loan processing fees are recognized of the financial statements and income and expenses when due and realizable. during the reporting period. Management believes that ▲▲ Other fees and commission are accounted for as the estimates used in the preparation of the financial and when they became due. statements are prudent and reasonable. Future results

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18.4.2 Investments d) Valuation Classification and valuation of the Bank’s investments are Investments categorized under AFS and HFT carried out in accordance with RBI Circular DBR.No.BP. categories are Marked-to-Market (MTM) on a BC.6/21.04.141/2015-16 dated July 1, 2015. periodical basis as per relevant RBI guidelines. Net depreciation, if any, in the category under Accounting and Classification the classification mentioned in Schedule 8 (‘Investments’) is recognized in the profit and The Bank follows settlement date accounting for loss account. The net appreciation, if any, in the Investments. In compliance with RBI guidelines, all category under each classification is ignored, investments, are categorized as “Held for trading” (‘HFT’), except to the extent of depreciation previously “Available for sale” (‘AFS’) or “Held to maturity” (‘HTM’) at provided. The book value of individual securities the time of its purchase. For the purpose of disclosure is not changed consequent to periodic valuation in the balance sheet, investments are classified as of investments. disclosed in Schedule 8 (‘Investments’) under six groups (a) government securities (b) other approved securities Investments received in lieu of restructured (c) shares (d) bonds and debentures (e) subsidiaries and advances scheme are valued in accordance joint ventures and (f) others. with RBI guidelines. Any diminution in value on these investments is provided for and is not a) Cost of acquisition used to set off against appreciation in respect Costs such as brokerage pertaining to investments, of other performing securities in that category. paid at the time of acquisition and broken period Depreciation on equity shares acquired and held by interest are charged to the profit and loss account the Bank under restructuring scheme is provided as as per the RBI guidelines. per RBI guidelines.

b) Basis of classification Investments classified under the HTM category are carried at their acquisition cost and any premium Securities that are held principally for resale within over the face value, paid on acquisition, is amortized 90 days from the date of purchase are classified on a straight-line basis over the remaining period under the HFT category. Investments that the to maturity. Amortization expense of premia on Bank intends to hold till maturity are classified investments in the HTM category is deducted from under the HTM category, or as per RBI guidelines. interest income in accordance with RBI Circular DBR. Securities which are not classified in the above No.BP.BC.6/21.04.141/2015-16 dated July 1, 2015. categories are classified under the AFS category. Where in the opinion of management, a diminution, other than temporary in the value of investments c) Transfer between categories classified under HTM has taken place, suitable Reclassification of investments from one category provisions are made. to the other, if done, is in accordance with RBI guidelines. Transfer of scrips from AFS / HFT Treasury Bills, Commercial Paper and Certificates of category to HTM category is made at the lower of deposit being discounted instruments, are valued book value or market value. In the case of transfer at carrying cost. of securities from HTM to AFS / HFT category, the investments held under HTM at a discount are Pass Through Certificates purchased for priority transferred to AFS / HFT category at the acquisition sector lending requirements are valued at Book price and investments placed in the HTM category Value in accordance with RBI guidelines. at a premium are transferred to AFS / HFT at the amortized cost. The market/fair value applied for the purpose of periodical valuation of quoted investments included Transfer of investments from AFS to HFT or vice-a- in the AFS and HFT categories is the market price versa is done at the book value. Depreciation carried, of the scrip as available from the trades/quotes on if any, on such investments is also transferred from the stock exchanges and for Subsidiary General one category to another. Ledger (‘SGL’) account transactions, the prices as

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periodically declared by Financial Benchmarks India or after April 1, 2017 which are backed by more Pvt. Ltd. (FBIL). than 50% of the stressed assets sold by the bank, provision for depreciation in value is made at higher The market/fair value of unquoted government of – provisioning rate required in terms of net assets securities included in the AFS and HFT category value declared by Rreconstruction Company (RC)/ is determined as per the prices published by FBIL. Securitization Company (SC) or the provisioning Further, in the case of unquoted bonds, debentures, rate as per the extant asset classification and pass through certificates (other than priority sector) provisioning norms as applicable to the underlying and preference shares, valuation is carried out loans, assuming that the loan notionally continue by applying an appropriate mark-up (reflecting in the books of the Bank. All other investments in associated credit risk) over the Yield to Maturity the Security Receipts are valued as per the NAV (‘YTM’) rates of government securities. Such mark obtained from issuing RC / SC. up and YTM rates applied are as per the relevant rates published by FIMMDA / FBIL. Investments in quoted Mutual Fund (MF) Units are valued at the latest repurchase price/net asset The Bank undertakes short sale transactions in value declared by the mutual fund. Investments in Central Government dated securities in accordance un-quoted MF Units are valued on the basis of the with RBI guidelines. The short position is reflected latest re-purchase price declared by the MF in respect as the amount received on sale and is netted in the of each particular Scheme. Investment schedule. The short position is marked to market and loss, if any, is charged to the Profit Investment in listed instruments of Real Estate and Loss account while gain, if any, is ignored. Investment Trust (REIT) / Infrastructure Investment Profit /Loss on settlement of the short position is Trust (INVIT) is valued at closing price on a recognized recognized in the Profit and Loss account. stock exchange with the higher volumes. In case the instruments were not traded on any stock exchange Units of Venture Capital Funds (VCF) held under within 15 days prior to date of valuation, valuation is AFS category are valued using the Net Asset Value done based on the latest NAV (not older than 1 year) (NAV) shown by VCF as per the financial statement. submitted by the valuer. The VCFs are valued based on the audited results once in a year. In case the audited financials are Sovereign foreign currency bonds are valued using not available for a period beyond 18 months, the Composite Bloomberg Bond Trader (CBBT) price investments are valued at `1 per VCF. or Bloomberg Valuation Service (BVAL) price or on Treasury curve in the chronological order based Quoted equity shares are valued at their closing price on availability. on a recognized stock exchange. Unquoted equity shares are valued at the break-up value if the latest Non-Sovereign foreign currency Bonds are valued balance sheet is available, else, at `1 per company, using either Composite Bloomberg Bond Trader as per relevant RBI guidelines. (CBBT) price, Bloomberg Valuation Service (BVAL) price, Bloomberg Generic price (BGN), Last available At the end of each reporting period, security receipts CBBT pricing for the instrument or Proxy Bond issued by the asset reconstruction company are Pricing from Bloomberg in the chronological order valued in accordance with the guidelines applicable based on availability. to such instruments, prescribed by RBI from time to time. Accordingly, in cases where the cash Masala bonds are valued using either Composite flows from security receipts issued by the asset Bloomberg Bond Trader (CBBT) price, Bloomberg reconstruction company are limited to the actual Valuation Service (BVAL) price or as per FIMMDA realization of the financial assets assigned to the guided valuation methodology for unquoted bonds instruments in the concerned scheme, the Bank in the chronological order based on availability. reckons the net asset value obtained from the asset reconstruction company from time to time, Special bonds such as oil bonds, fertilizer bonds, for valuation of such investments at each reporting UDAY bonds etc. which are directly issued by date. In case of investment in Security Receipts on

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Government of India (‘GOI’) is valued based on advised all banks to create an IFR with effect from FBIL valuation. the FY 2018-19.

Non-performing investments are identified and Transferred to IFR will be lower of the following depreciation/provision are made thereon based (i) net profit on sale of investments during the on the RBI guidelines. Based on management year or (ii) net profit for the year less mandatory assessment of impairment, the Bank additionally appropriations, until the amount of IFR is at least creates provision over and above the RBI guidelines. 2 percent of the HFT and AFS portfolio, on a The depreciation/provision on such non-performing continuing basis. investments are not set off against the appreciation in respect of other performing securities. Interest on 18.4.3 Advances non-performing investments is not recognized in the Accounting and classification Profit and Loss account until received. Advances are classified as performing and non-performing e) Profit/Loss on sale of Investments based on the relevant RBI guidelines. Advances are stated net of specific provisions, interest in suspense, inter-bank Profit/Loss on sale of Investments in the HTM participation certificates issued and bills rediscounted. category is recognized in the profit and loss account and profit thereafter is appropriated (net of applicable Provisioning taxes and statutory reserve requirements) to Capital Reserve. Profit/Loss on sale of investments in HFT Provisions in respect of non-performing advances are and AFS categories is recognized in the Profit made based on management’s assessment of the and Loss account. degree of impairment of the advances, subject to the minimum provisioning level prescribed in relevant f) Accounting for repos/reverse repos RBI guidelines. The specific provision levels for retail non-performing assets are also based on the nature of Securities sold under agreements to repurchase product and delinquency levels. Specific provisions in (Repos) and securities purchased under agreements respect of non-performing advances are charged to the to resell (Reverse Repos) including liquidity Profit and Loss account and included under Provisions adjustment facility (LAF) with RBI are treated as and Contingencies. collateralized borrowing and lending transactions respectively in accordance with RBI master circular As per the RBI guidelines a general provision is made on No. DBR.No.BP.BC.6/21.04.141/2015-16 dated all standard advances, including provision for borrowers July 1, 2015. The first leg of the repo transaction having unhedged foreign currency exposure and for is contracted at the prevailing market rates. credit exposures computed as per the current marked The difference between consideration amounts of to market values of interest rate and foreign exchange first and second (reversal of first) leg reflects interest derivative contracts. These also include provision for and is recognized as interest income/expense over stressed sector exposures and provision for incremental the period of transaction. exposure of the banking system to a specified borrower beyond Normally Permitted Lending Limit (NPLL) in Bank also undertakes Repo and Reverse repo proportion to bank’s funded exposure to specified transactions from IFSC Banking Unit in GIFT borrower. Such provisions are included in Schedule 5 – City in Foreign currency Sovereign Securities ‘Other liabilities & provisions – Others’. and accounting is similar to the domestic repo transactions. In respect of restructured standard and non-performing advances, provision is made for the present value of g) Investment fluctuation reserve principal and interest component sacrificed at the time of With a view to building up of adequate reserves restructuring the assets, based on the RBI guidelines. to protect against increase in yields, RBI through circular number RBI/2017-18/147 DBR.No.BP. Accounts are written-off in accordance with the Bank’s BC.102/21.04.048/2017-18 dated April 2, 2018, policies. Recoveries from bad debts written-off are

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Schedules forming part of Financial Statements recognized in the Profit and Loss account and included correspondingly in other assets (representing positive under other income. Mark-to-Market) and in other liabilities (representing negative Mark-to-Market (MTM)) on a gross basis. In case of loans sold to asset reconstruction company, if consideration is more than net book value, the Bank In accordance with AS 11 ‘The Effects of changes in records the security receipts as investment at Net Book Foreign Exchange Rates’, contingent liabilities in respect Value as per RBI guidelines. of outstanding foreign exchange forward contracts, derivatives, guarantees, endorsements and other The Bank has in place a Country Risk management obligations are stated at the exchange rates notified by policy as part of its Board approved Credit policy, which FEDAI corresponding to the balance sheet date. is based on extant regulatory guidelines and addresses the identification, measurement, monitoring and reporting Both monetary and non-monetary foreign currency of country risk. Countries are categorized into seven risk assets and liabilities of non-integral foreign operations categories, viz. Insignificant, Low Risk, Moderately Low are translated at closing exchange rates notified by FEDAI Risk, Moderate Risk, Moderately Risk, High Risk and Very at the Balance Sheet date and the resulting profit/loss High Risk. The Bank calculates direct and indirect country arising from exchange differences are accumulated in the risk in line with the policy requirements. Indirect exposure Foreign Currency Translation Account until the disposal of is reckoned at 50% of the exposure in case of countries the net investment in the non-integral foreign operations. where the net funded exposure exceeds 1% of the Bank’s total assets. Further, if the net funded exposure In accordance with the RBI clarification, the Bank does not of the Bank in respect of each country exceeds 1% of recognise in the profit and loss account the proportionate the Bank’s total assets, provisioning is required to be exchange gains or losses held in the foreign currency made on exposure to such countries. Depending on the translation reserve on repatriation of profits from risk category of the country, provisioning is done on a overseas operations. graded scale ranging from 0.25% to 100% for exposures with contractual maturity greater than or equal to 180 Currency future contracts are marked to market daily days. In respect of short-term exposures with contractual using settlement price on a trading day, which is the maturity less than 180 days, 25% of the normal provision closing price of the respective future contracts on that requirement is held. day. While the daily settlement prices is computed on the basis of weighted average price of such contract, the 18.4.4 Transactions involving foreign final settlement price is taken as the RBI reference rate exchange on the last trading day of the future contract or as may be specified by the relevant authority from time to time. Foreign currency income and expenditure items of domestic All open positions are marked to market based on the operations are translated at the exchange rates prevailing settlement price and the resultant marked to market profit on the date of the transaction. Income and expenditure /loss is daily set. items of integral foreign operations (representative offices) are translated at the daily average closing rates 18.4.5 Earnings per share and of non-integral foreign operations (foreign branches) at the monthly average closing rates. The Bank reports basic and diluted earnings per equity share in accordance with Accounting Standard (AS) 20, Premia/discounts on foreign exchange swaps, that are “Earnings per Share” notified under Section 133 of the used to hedge risks arising from foreign currency assets Companies, Act 2013. Basic earnings per equity share and liabilities, are amortized over the life of the swap. have been computed by dividing net profit after tax for the year by the weighted average number of equity Monetary foreign currency assets and liabilities are shares outstanding for the period. translated at the balance sheet date at rates notified by the Foreign Exchange Dealers’ Association of India Diluted earnings per equity share have been computed (‘FEDAI’). Foreign exchange contracts are stated at using the weighted average number of equity shares and net present value using LIBOR/SWAP curves of the dilutive potential equity shares options outstanding during respective currencies with the resulting unrealized gain or the period except where the results are anti dilutive. loss being recognized in the Profit and Loss Account and

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18.4.6 Accounting for derivative transactions The amounts received/paid on cancellation of option contracts are recognized as realized gains/losses on Derivative transactions comprises forward rate options. Charges receivable/payable on cancellation/ agreements, swaps and option contracts. The Bank termination of foreign exchange forward contracts and undertakes derivative transactions for market making/ swaps are recognized as income/expense on the date of trading and hedging on-balance sheet assets and cancellation/ termination under ‘Other Income’. liabilities. All market making/trading transactions are marked to market on a monthly basis and the resultant Valuation of Interest Rate Futures (IRF) is carried out on unrealized gains/losses are recognized in the profit the basis of the daily settlement price of each contract and loss account. provided by the exchange. Derivative transactions that are undertaken for hedging The requirement for collateral and credit risk mitigation are accounted for on accrual basis except for the on derivative contracts is assessed based on internal transaction designated with an asset or liability that is credit policy. Overdues if any, on account of derivative carried at market value or lower of cost or market value transactions are accounted in accordance with extant in the financial statements, which are accounted similar to RBI guidelines. the underlying asset or liability. As per the RBI guidelines on ‘Prudential Norms for Cross currency interest rate swaps which are used by the Off-balance Sheet Exposures of Banks’ a general Bank to hedge its foreign currency borrowings have been provision is made on the current gross MTM gain of designated as cash flow hedges and are measured at fair the contract for all outstanding interest rate and foreign value. The corresponding gain or loss is recognized as exchange derivative transactions. cash flow hedge reserve. Further to match profit/ loss on account of revaluation of foreign currency borrowing, the 18.4.7 Fixed assets corresponding amount is recycled from cash flow hedge reserve to Profit and Loss account. Fixed assets are stated at cost less accumulated depreciation, amortization and accumulated impairment The Bank follows the option premium accounting losses. Cost comprises the purchase price and any cost framework prescribed by FEDAI SPL – circular dated attributable for bringing the asset to its working condition December 14, 2007. Premium on option transaction for its intended use. Subsequent expenditure incurred on is recognized as income/expense on expiry or early assets put to use is capitalised only when it increases the termination of the transaction. Mark-to-Market (MTM) future benefit/ functioning capability from/ of such assets. gain/loss (adjusted for premium received/paid on option contracts) is recorded under ‘Other Income’.

18.4.8 Depreciation Depreciation on fixed assets is provided on straight-line method, over estimated useful lives, as determined by the management, at the rates mentioned below –

Useful life of Assets as per Useful life of Assets as per Class of asset Companies Act, 2013 Bank’s Accounting Policy Owned Premises 60 years 60 years Office equipment 5 years 5 years Computer hardware1 6 years 3 years Computer software * 6 years 4 years Vehicles1 8 years 5 years Furniture and Fixtures 10 years 10 years Automated Teller Machines (‘ATMs’) 1 15 years 10 years Leasehold improvements to premises - Over the lease period or 9 years whichever is less. * As per RBI Guidelines.

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1 Based on technical evaluation, the management believes that the useful lives as given above best represent the period over which management expects to use these assets. Hence, the useful lives for these assets is different from the useful lives as prescribed under Part C of Schedule II of the Companies Act 2013.

▲▲ Assets costing up to `5,000 are fully depreciated in employee stock options using the intrinsic value method. the year of purchase. Compensation cost is measured by the excess, if any, of the fair market price of the underlying stock (i.e. the last ▲▲ For assets purchased/sold during the year, closing price on the stock exchange on the day preceding depreciation is being provided on pro rata basis by the date of grant of stock options) over the exercise price. the Bank. The exercise price of the Bank’s stock option is the last ▲▲ Improvements to leasehold assets are depreciated closing price on the stock exchange on the day preceding over the remaining period of lease the date of grant of stock options and accordingly there is no compensation cost under the intrinsic value method. ▲▲ Reimbursement, if any, is recognized on receipt and is adjusted to the book value of asset and Compensated absence depreciated over the balance life of the asset The employees of the Bank are entitled to carry forward ▲▲ Whenever there is a revision in the estimated useful a part of their unavailed/unutilized leave subject to life of the asset, the unamortized depreciable a maximum limit. The employees cannot encash amount is charged over the revised remaining useful unavailed/unutilized leave. The Bank provides for leave life of the said asset encashment/compensated absences based on an ▲▲ The useful life of assets is based on historical independent actuarial valuation at the Balance Sheet experience of the Bank, which is different from date, which includes assumptions about demographics, the useful life as prescribed in Schedule II to the early retirement, salary increases, interest rates and Companies Act, 2013. leave utilisation.

18.4.9 Impairment of assets Gratuity Assets are reviewed for impairment whenever events The Bank provides for gratuity, a defined benefit retirement or changes in circumstances indicate that the carrying plan, covering eligible employees. The plan provides for amount of an asset may not be recoverable. An asset’s lump sum payments to vested employees at retirement recoverable amount is the higher of an asset’s net selling or upon death while in employment or on termination of price and its value in use. If such assets are considered to employment for an amount equivalent to 15 days’ eligible be impaired, the impairment is recognized by debiting the salary payable for each completed year of service if the profit and loss account and is measured as the amount service is more than 5 years. The Bank accounts for the by which the carrying amount of the assets exceeds the liability for future gratuity benefits using the projected unit recoverable amount of the assets. cost method based on annual actuarial valuation.

18.4.10 Employee benefits The defined gratuity benefit plans are valued by an independent actuary as at the Balance Sheet date using Employee Stock Option Scheme (‘ESOS’) the projected unit credit method as per the requirement of The Employee Stock Option Scheme (‘the Scheme’) AS-15, Employee Benefits, to determine the present value provides for the grant of options to acquire equity shares of the defined benefit obligation and the related service of the Bank to its employees. The options granted to costs. Under this method, the determination is based on employees vest in a graded manner and these may be actuarial calculations, which include assumptions about exercised by the employees within specified periods. demographics, early retirement, salary increases and interest rates. Actuarial gain or loss is recognized in the Measurement of the employee share-based payment Profit and Loss account. plans is done in accordance with the Guidance Note on Accounting for Employee Share-based Payments issued Provident fund by Institute of Chartered Accountants of India (ICAI) and In accordance with law, all employees of the Bank are SEBI (Share Based Employee Benefits) Regulations, entitled to receive benefits under the provident fund, a 2014. The Bank measures compensation cost relating to defined contribution plan in which both the employee and

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the Bank contribute monthly at a pre determined rate. Deferred tax assets are recognized only to the extent Contribution to provident fund are recognized as expense there is reasonable certainty that the assets can be as and when the services are rendered The Bank has no realized in future. In case of unabsorbed depreciation liability for future provident fund benefits other than its or carried forward loss under taxation laws, all deferred annual contribution. tax assets are recognized only if there is virtual certainty of realization of such assets supported by convincing In February 2019, the honorable Supreme Court of India evidence. Deferred tax assets are reviewed at each in its judgment clarified that certain special allowances balance sheet date and appropriately adjusted to should be considered to measure obligations under reflect the amount that is reasonably/virtually certain Employees’ Provident Funds and Miscellaneous to be realized. Provisions Act, 1952 (the PF Act). The Bank has been legally advised that there are interpretative challenges on 18.4.13 Provisions and contingent the application of judgment retrospectively and as such assets/liabilities does not consider there is any probable obligations for A contingent liability is a possible obligation that arises past periods. Due to imperative challenges, the Bank has from past events whose existence will be confirmed by the not disclosed contingent liability amount for past liability. occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Bank or National Pension System (NPS) a present obligation that arises from past events that is The NPS is a defined contribution retirement plan. not recognized because it is not probable that an outflow The primary objective is enabling systematic savings and of resources will be required to settle the obligation or a to provide retirees with an option to achieve financial reliable estimate of the amount of the obligation cannot be stability. Pension contributions are invested in the pension made. The Bank does not recognize a contingent liability fund schemes. The Bank has no liability for future fund but discloses its existence in the financial statements benefits other than the voluntary contribution made by employees who agree to contribute to the scheme. In accordance with AS 29, Provisions, Contingent Liabilities and Contingent Assets, the Bank creates a 18.4.11 Leases provision when there is a present obligation as a result of a past event that probably requires an outflow of Leases where the lessor effectively retains substantially all resources and a reliable estimate can be made of the risks and benefits of ownership are classified as operating amount of the obligation. leases. Operating lease payments are recognized as an expense in the profit and loss account on a straight-line Provisions are reviewed at each balance sheet date and basis over the lease term in accordance with Accounting adjusted to reflect the current best estimate. If it is no Standard – 19, Leases. longer probable that an outflow of resources would be required to settle the obligation, the provision is reversed. 18.4.12 Income taxes Tax expense comprises current and deferred tax. Contingent assets are not recognized in the financial Current tax comprises of the amount of tax for the period statements. However, contingent assets are assessed determined in accordance with the Income Tax Act, 1961 continually and if it is virtually certain that an inflow of and the rules framed there under. Deferred income taxes economic benefits will arise, the asset and related income reflects the impact of current year timing differences are recognized in the period in which the change occurs. between taxable income and accounting income for the year and reversal of timing differences of earlier years. 18.4.14 Cash and Cash equivalent Deferred tax assets and liabilities are recognized for the Cash and cash equivalents include cash in hand, balances future tax consequences of timing differences between with RBI, balances with other banks and money at call the carrying values of assets and liabilities and their and short notice. respective tax bases, and operating loss carry forwards. Deferred tax assets and liabilities are measured using the enacted or substantively enacted tax rates at the balance sheet date.

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18.4.15 Corporate social responsibility The Bank also deals in bullion on a borrowing and lending basis and the interest paid/received thereon is classified Expenditure towards corporate social responsibility, in as interest expense/income respectively. accordance with Companies Act, 2013, are recognized in the Profit and Loss account. 18.4.18 Share issue expenses 18.4.16 Debit and credit cards reward points Share issue expenses are adjusted from Share Premium Account in terms of Section 52 of the The Bank estimates the probable redemption of debit Companies Act, 2013. and credit card reward points and cost per point using actuarial valuation method by employing an independent 18.4.19 Segment information actuary, which includes assumptions such as mortality, redemption and spends. The disclosure relating to segment information is in accordance with AS-17, Segment Reporting and as per Provisions for liabilities on said reward points are made guidelines issued by RBI. based on the actuarial valuation report as furnished by the said independent actuary and included in other liabilities. 18.4.20 Priority Sector Lending Certificates (PSLC) 18.4.17 Bullion The Bank, in accordance with RBI circular FIDD.CO.Plan. The Bank imports bullion including precious metal bars BC.23/ 04.09.01/2015-16 dated April 7, 2016, trades in on a consignment basis for selling to its customers. priority sector portfolio by selling or buying PSLC. There is The imports are typically on a back-to-back basis and no transfer of risks or loan assets in these transactions. are priced to the customer based on a price quoted The fee paid for purchase of the PSLC is treated as an by the supplier. The Bank earns a fee on such bullion ‘Expense’ and the fee received from the sale of PSLCs is transactions. The fee is classified in other income. treated as ‘Other Income’.

18.5 Capital 18.5.1.1 Equity Issue During the financial year ended March 31, 2019, the Bank has issued 12,065,794 shares pursuant to the exercise of stock option aggregating to `953.47 million (previous year: `1,378.65 million)

Movement in Share Capital (` in million) As at As at Share Capital March 31, 2019 March 31, 2018 Opening Share Capital 4,605.93 4,564.86 Addition due to exercise of Stock Option 24.13 41.07 Addition due to shares issued to QIP – – Closing Share Capital 4,630.07 4,605.93

18.5.1.2 Proposed Dividend: by employees between the end of the financial year and the dividend declaration date. The Board of Directors of the Bank has recommended a dividend of `2 per equity share for approval by 18.5.1.3 Capital Reserve shareholders at the 15th Annual General Meeting. If approved, the total liability arising to the Bank would Profit on sale of investments in the Held to Maturity be `5,582.01 million, including dividend tax (previous category is credited to the Profit and Loss Account year: `7,503.64 million). The actual dividend payout may and thereafter appropriated to capital reserve (net of however change due to equity shares options exercised

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applicable taxes and transfer to statutory reserve requirements). During the year `1,010.10 million (previous year: `659.65 million) was transferred to Capital Reserve.

18.5.1.4 Investment Reserve The Bank has transferred `6.71 million to Investment Reserve (previous year: ` Nil) (net of applicable taxes and transfer to statutory reserve requirements) on provisions for depreciation on investments credited to Profit and Loss Account.

18.5.1.5 Cash Flow Hedge Reserve The Bank has credited `218.73 million to Cash Flow Hedge Reserve (previous year: debited `83.92 million) on cross currency interest rate swaps which are used by the Bank to hedge its foreign currency borrowings and have been designated as cash flow hedges and are measured at fair value.

18.5.1.6 Investment Fluctuation Reserve (IFR) During the year ended March 31, 2019, the Bank has transferred `539.07 million in IFR (previous year: ` Nil).

18.5.1.7 Capital Adequacy Ratio Capital Adequacy Ratio as per RBI guidelines as at March 31, 2019 is given below: (` in million) As at As at Basel – III March 31, 2019 March 31, 2018 Common Equity Tier I* 256,989.71 248,503.97 Additional Tier I Capital 87,871.00 88,879.76 Tier I capital 344,860.71 337,383.73 Tier II capital 159,730.59 132,373.34 Total capital 504,591.30 469,757.06 Credit Risk – Risk Weighted Assets (RWA) 2,678,862.12 2,232,542.97 Market Risk – RWA 191,932.33 181,613.67 Operational Risk – RWA 184,986.56 139,276.11 Total risk weighted assets 3,055,781.01 2,553,432.74 Common Equity capital adequacy ratio (%) 8.4% 9.7 % Tier I capital adequacy ratio (%) 11.3% 13.2 % Tier II capital adequacy ratio (%) 5.2% 5.2 % Total capital adequacy ratio (%) 16.5% 18.4 % Amount raised during the year by issue of IPDI - 54,150.00 Amount raised during the year by issue of Tier II Capital 30,420.00 70,000.00

* Adjusted for proposed dividend of `2 per share and applicable taxes.

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18.5.1.8 Tier I and Tier II Capital During the financial year ended March 31, 2019, the Bank has issued Tier II instruments amounting to` 30,420 million:

(` in million) Nature of Coupon Particulars Date of Issue Tenure Amount Security Rate (%) Rated Listed Non-convertible, Redeemable, Debentures September 17, 2018 9.12 10 Years 30,420 Unsecured, Basel III compliant Tier 2 Bonds in the nature of debentures TOTAL 30,420

During the financial year ended March 31, 2018, the Bank has issued additional Tier I instruments amounting to` 54,150 million and Tier II instruments amounting to `70,000 million: (` in million) Nature of Coupon Particulars Date of Issue Tenure Amount Security Rate (%) Rated, Listed, Non-Convertible, Debentures September 29, 2017 7.80 10 Years 25,000.00 Redeemable, Unsecured, Basel III Compliant Tier II Bonds in the nature of debentures Rated, Listed, Non-Convertible, Debentures October 3, 2017 7.80 9 Years 11 15,000.00 Redeemable, Unsecured, Basel III Months & Compliant Tier II Bonds in the nature of 28 Days debentures Perpetual Subordinated Unsecured Debentures October 18, 2017 9.00 Perpetual 54,150.00 Basel III Compliant Additional Tier I Bonds In The Nature Of Debentures Rated, Listed, Non-Convertible, Debentures February 22, 2018 8.73 10 Years 30,000.00 Redeemable, Unsecured, Basel III Compliant Tier II Bonds in the nature of debentures TOTAL 124,150.00

Annual Report 2018-19 215 Schedules forming part of Financial Statements

18.5.2 Investments I) Value of Investments (` in million) As at As at Particulars March 31, 2019 March 31, 2018 Gross value of Investments 905,718.50 687,662.67 – In India 782,311.14 677,302.96 – Outside India 123,407.36 10,359.71 Provision for depreciation 10,498.17 3,673.29 – In India* 10,219.73 3,667.74 – Outside India 278.45 5.55 Net Value of Investments 895,220.33 683.989.39 – In India 772,091.41 673,635.22 – Outside India 123,128.92 10,354.16

* Includes a provision of `987.81 million (previous year: `606.24 million) held for non-performing investments.

II) Movement of provisions held towards depreciation on investments (` in million) As at As at Particulars March 31, 2019 March 31, 2018 Opening Balance 3,673.29 1,073.85 Add: Provision made during the year 7,166.05 2,617.68 Less: Write-off/write back of provision during the year 341.16 18.24 Closing Balance 10,498.18 3,673.29

Sales and transfers of securities to/from Held to Maturity (HTM) category The Bank has not sold or transferred securities to or from HTM category exceeding 5% of the book value of investment held in HTM category at the beginning of the year. The 5% threshold referred to above does not include onetime transfer of securities to/from HTM category with the approval of Board of Directors permitted to be undertaken by banks as per extant RBI guidelines, shifting of securities explicitly permitted by the Reserve Bank from time to time, sale of securities or transfer to AFS / HFT consequent to the reduction of ceiling on SLR securities under HTM, sale of securities under pre-announced Open Market Operation (OMO) auction to the RBI and repurchase of Government securities by Government of India from banks as permitted by RBI.

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18.5.3 Repo Transactions The details of securities sold and purchased under repos and reverse repos during the year ended March 31, 2019: (` in million) Minimum Maximum Daily average As at outstanding outstanding outstanding 31-March-19 during the year during the year during the year Securities sold under repos i) Government Securities - 69,230.88 11,884.73 4,996.81 ii) Corporate debt securities - - - - Security purchased under reverse repo i) Government Securities - 96,027.29 20,868.98 20,310.16 ii) Corporate debt securities – – – –

The details of securities sold and purchased under repos and reverse repos during the year ended March 31, 2018: (` in million) Minimum Maximum Daily average As at outstanding outstanding outstanding 31-March-18 during the year during the year during the year Securities sold under repos i) Government Securities - 48,441.62 4,078.77 5,311.40 ii) Corporate debt securities – – – – Security purchased under reverse repo i) Government Securities 511.25 85,267.55 20,442.17 47,459.65 ii) Corporate debt securities – – – –

The above table represents the book value of securities sold and purchased under repos, triparty repos (TREPS) and reverse repos with inter-bank counterparties. It does not include securities sold and purchased under Liquidity Adjusted Facility (LAF) with RBI.

Annual Report 2018-19 217 Schedules forming part of Financial Statements

18.5.4 Non-SLR Investment Portfolio i. Issuer composition of Non-SLR investments Issuer composition of Non-SLR investments as at March 31, 2019 is given below: (` in million) Extent of Extent of ‘below Extent of Extent of private investment ‘unrated’ ‘unlisted’ No. Issuer Amount placement grade’ securities # securities* (a) securities (c) (d) (b) i) PSUs 1,112.80 1,112.80 - - 62.80 ii) Financial Institutions 129,659.42 86,742.28 - 3,065.10 15,756.38 iii) Banks 696.05 - - - 696.05 iv) Private Corporates 51,852.94 51,132.73 5,500.00 525.62 7,799.85 v) Subsidiaries/Joint ventures 2,240.00 2,240.00 - 2,240.00 vi) Others 166,501.23 45,644.20 - - 166,241.23 vii) Provision held towards (10,453.24) - depreciation** Total 341,609.21 186,872.01 5,500.00 3,590.71 192,796.31

* Investments amounting to `189,246.31 million are exempted from applicability of RBI prudential limit for Unlisted Non-SLR securities. # excludes investment in equity shares and units, non-Indian government securities of IBU and Non-SLR government of India securities. ** Includes a provision of `987.81 million held for non-performing investments.

Amounts reported under columns (a), (b), (c) and (d) above are not mutually exclusive. Issuer composition of Non-SLR investments as at March 31, 2018 is given below: (` in million) Extent of Extent of ‘below Extent of Extent of private investment ‘unrated’ ‘unlisted’ No. Issuer Amount placement grade’ securities # securities* (a) securities (c) (d) (b) i) PSUs 5,423.34 911.70 - - 5,423.34 ii) Financial Institutions 53,731.19 53,726.19 - 264.19 264.19 iii) Banks 30.22 30.22 - - - iv) Private Corporates 102,809.99 91,650.26 50.00 568.12 12,863.92 v) Subsidiaries/Joint ventures 1,055.00 1,055.00 - - 1,055.00 vi) Others 35,481.69 32,030.53 - - 35,481.69 Provision held towards (3,402.88) - - - - vii) depreciation** Total 195,128.56 179,403.90 50.00 832.31 55,088.14

*Investments amounting to `51,538 million are exempted from applicability of RBI prudential limit for Unlisted Non-SLR securities. # excludes investment in equity shares and units, non-Indian government securities of IBU and Non-SLR government of India securities. ** Includes a provision of `606.24 million held for non-performing investments. Amounts reported under columns (a), (b), (c) and (d) above are not mutually exclusive

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ii. Non-Performing Investments

(` in million) Particulars March 31, 2019 March 31, 2018 Opening Balance 674.94 460.09 Additions during the year 479.14 285.76 Reductions during the year - 70.91 Closing Balance 1,154.08 674.94 Total Provision Held 987.81 606.24

18.6 Derivatives 18.6.1 Forward Rate Agreement/Interest Rate Swap

The details of Forward Rate Agreements/Interest Rate Swaps outstanding as at March 31, 2019 is given below: (` in million) Sr. As at As at Items No March 31, 2019 March 31, 2018 i) The notional principal of swap agreements 1,702,671.19 1,141,440.35 Losses which would be incurred if counter-parties failed to fulfill their 2,740.33 1,760.74 ii) obligations under the agreements1 iii) Collateral required by the bank upon entering into swaps - - Concentration of credit risk arising from the swaps [Percentage 12.75% 21.56% iv) Exposure to Banks] 1 [Percentage Exposure to PSUs] 1 22.14% 52.29% v) The fair value of the swap book 2 (1,661.03) (285.43) - INBMK (179.66) (39.32) - MIBOR (1,280.48) (317.97) - MIFOR (542.91) 129.79 - FCY IRS 342.03 (57.93)

1 Losses and Credit risk concentration are measured as net receivable under swap contracts. 2 Fair values represent mark-to-market including accrued interest.

The nature and terms of the Rupee IRS as on March 31, 2019 are set out below: (` in million) Nature Nos Notional Principal Benchmark Terms Trading 13 15,760.00 INBMK Fixed Payable V/S Floating Receivable Trading 1 1,000.00 INBMK Fixed Receivable V/S Floating Payable Trading 630 278,870.61 MIBOR Fixed Payable V/S Floating Receivable Trading 645 261,024.55 MIBOR Fixed Receivable V/S Floating Payable Trading 266 103,934.30 MIFOR Fixed Payable V/S Floating Receivable Trading 173 64,632.70 MIFOR Fixed Receivable V/S Floating Payable

Annual Report 2018-19 219 Schedules forming part of Financial Statements

The nature and terms of the FCY IRS as on March 31, 2019 are set out below: (` in million) Notional Nature Nos Benchmark Terms Principal Hedging 2 32,997.03 USD LIBOR Fixed Receivable V/S Floating Payable Trading 611 347,201.72 USD LIBOR Fixed Payable V/S Floating Receivable Trading 548 339,546.98 USD LIBOR Fixed Receivable V/S Floating Payable Trading 228 225,530.36 USD LIBOR Floating Payable V/S Floating Receivable Trading 36 4,728.11 EURIBOR Fixed Payable V/S Floating Receivable Trading 42 5,304.32 EURIBOR Fixed Receivable V/S Floating Payable Trading 1 124.84 JPY LIBOR Fixed Payable V/S Floating Receivable Trading 14 11,152.68 GBP LIBOR Fixed Payable V/S Floating Receivable Trading 3 10,863.00 GBP LIBOR Fixed Receivable V/S Floating Payable

The nature and terms of the Rupee IRS as on March 31, 2018 are set out below: (` in million) Notional Nature Nos Benchmark Terms Principal Hedging 2 750.00 MIFOR Fixed Payable V/S Floating Receivable Trading 13 15,760.00 INBMK Fixed Payable V/S Floating Receivable Trading 1 1,000.00 INBMK Fixed Receivable V/S Floating Payable Trading 473 235,350.32 MIBOR Fixed Payable V/S Floating Receivable Trading 498 206,242.32 MIBOR Fixed Receivable V/S Floating Payable Trading 252 95,332.30 MIFOR Fixed Payable V/S Floating Receivable Trading 134 54,299.10 MIFOR Fixed Receivable V/S Floating Payable

The nature and terms of the FCY IRS as on March 31, 2018 are set out below: (` in million) Notional Nature Nos. Benchmark Terms Principal Hedging 2 39,105.00 USD LIBOR Fixed Receivable V/S Floating Payable Trading 400 201,337.24 USD LIBOR Fixed Receivable V/S Floating Payable Trading 400 174,714.57 USD LIBOR Fixed Payable V/S Floating Receivable Trading 162 102,673.66 USD LIBOR Floating Receivable V/S Floating Payable Trading 18 2,652.59 EURIBOR Fixed Receivable V/S Floating Payable Trading 18 2,872.49 EURIBOR Fixed Payable V/S Floating Receivable Trading 1 123.01 JPY LIBOR Fixed Payable V/S Floating Receivable Trading 2 4,613.88 GBP LIBOR Fixed Payable V/S Floating Receivable Trading 2 4,613.88 GBP LIBOR Fixed Receivable V/S Floating Payable

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18.6.2 Un-hedged/uncovered foreign currency exposure of the Bank The Bank’s foreign currency exposures as at March 31, 2019 that are not hedged/covered by either derivative instruments or otherwise are within the Net Overnight Open Position limit (NOOP) and the Aggregate Gap limit, as approved by the RBI. NOOP is `2,205.59 million as at March 31, 2019 (March 31, 2018 `1,353.36 million).

18.6.3 Exchange Traded Interest Rate Derivatives The following table sets forth, for the period indicated, the details of exchange traded interest rate derivatives: (` in million) Sr. Particulars As at March 31, 2019 As at March 31, 2018 No. Notional Principal amount of exchange traded interest rate 1 derivatives undertaken during the year: - 6.79% Government Securities 2027 22,884.80 35,757.20 - 7.17% Government Securities 2028 173,803.40 - - 6.68% Government Securities 2031 750.00 - Notional Principal amount of exchange traded interest rate - 2 derivatives outstanding: - 6.79% Government Securities 2027 – – - 7.17% Government Securities 2028 4,945.00 – - 6.68% Government Securities 2031 750.00 – Notional Principal amount of exchange traded interest rate N.A. 3 derivatives outstanding and not “highly effective” 4. Mark-to-Market value of exchange traded interest rate derivatives N.A. outstanding and not “highly effective”

18.6.4 Currency Futures The Bank had dealt in exchange traded currency forwards (Futures) during the financial year ended March 31, 2019 and March 31, 2018. As at March 31, 2019 the open contracts on the exchange were to the tune of USD 4.104 million (`285.29 million) for April 2019 expiry and for March 31, 2018 – Nil open contracts.

18.6.5 Disclosures on risk exposure in derivatives As per RBI Master circular DBR.BP.BC.No.23/21.04.018/2015-16 dated July 1, 2015, the following disclosures are being made with respect to risk exposure in derivatives of the Bank: a) Purpose: The Bank uses Derivatives including Forwards & swaps for various purposes including hedging its currency and interest rate risk in its balance sheet, customer offerings and proprietary trading. The management of these products and businesses is governed by Market Risk Policy, Investment Policy, Derivatives Policy, Derivatives Appropriateness Policy, Hedging Policy and ALM policy. b) Structure: The Board of Directors of the Bank have constituted a Board level sub-committee, the Risk Monitoring Committee (‘RMC’) and delegated to it all functions and responsibilities relating to the risk management policy of the Bank and its supervision thereof. c) As part of prudent business and risk management practice, the Bank has also instituted a comprehensive limit and control structure encompassing Value-at-Risk (VAR), Sensitivity, Greeks, Stop loss & credit limits for derivative transactions including suitability and appropriateness framework. The Bank has an internal reporting mechanism providing regular reports to the RMC as well as to the management of the Bank. Such a structure helps the Bank to monitor and mitigate market risk across FX and interest rates.

Annual Report 2018-19 221 Schedules forming part of Financial Statements

d) The Bank has an independent Middle Office and Market Risk functions, which are responsible for monitoring, measurement, and analysis of derivative related risks, among others. The Bank has a Credit Risk Management unit which is responsible for setting up counterparty limits and also a treasury operation unit which is responsible for managing operational aspects of derivatives including settlement of transactions. The Bank is subject to a concurrent audit for all treasury transactions, including derivatives transactions, a monthly report of which is periodically submitted to the Audit & Compliance Committee of the Bank. e) In addition to the above, the Bank independently evaluates the potential credit exposure on account of all derivative transactions, wherein risk limits are specified separately for each product, in terms of both credit exposure and tenor. As mandated by the Credit Policy of the Bank, the Bank has instituted an approval structure for all treasury/ derivative related credit exposures. Wherever necessary, appropriate credit covenants are stipulated as trigger events to call for collaterals or terminate transaction and contain the risks. f) The Bank reports all trading positions to the management on a daily basis. The Bank revalues its trading position on a daily basis for Management and Information System (‘MIS’) and control purposes and records the same in the books of accounts on a monthly basis. g) For derivative contracts in the banking book designated as hedge, the Bank documents at the inception of the relationship between the hedging instrument and the underlying exposure, the risk management objective for undertaking the hedge and the ALCO monitors all outstanding hedges on a periodical basis. Further the Bank’s ‘Hedging Policy’ has stipulated conditions to ensure that the Hedges entered into are effective. h) Refer Note 18.4.6 for accounting policy on derivatives. The details of derivative transactions as at March 31, 2019 and March 31, 2018 are given below: (` in million) Currency derivatives 1 Interest rate derivatives 4 Sr. As at As at Particular As at As at No. March 31, March 31, March 31, March 31, 2019 2018 2019 2018 i) Derivatives (Notional Principal Amount) a) For hedging 24,894.18 27,349.32 32,997.03 39,855.00 b) For trading 837,853.50 756,398.59 1,675,217.65 1,101,585.35 ii) Marked to market positions2 a) Asset (+) 11,870.11 9,189.21 11,227.54 5,481.15 b) Liability (-) 12,210.08 8,273.63 13,228.06 5,599.59 iii) Credit exposure3 64,931.17 56,452.85 26,289.71 17,500.44 Likely impact of one percentage change in iv) interest rate (100*PV01) (Refer Note 1&2 below) a) on hedging derivatives 320.47 479.20 1,103.47 1,726.80 b) on trading derivatives 1,283.29 535.57 2,205.81 2,100.19 Maximum and minimum of 100*PV01 observed v) during the year (Refer Note 1&2 below) a) on hedging Maximum 564.00 604.30 1,779.17 1,798.95 Minimum 308.14 364.25 1,082.50 3.62 b) on trading Maximum 1,368.24 1,025.93 2,932.88 2,216.24 Minimum 348.04 409.68 1,654.17 1,394.45 1 Currency derivatives includes options purchased and sold, cross currency interest rate swaps and currency futures. 2 Trading portfolio including accrued interest. 3 Mark-to-Market for credit exposure includes accrued interest. 4 Interest rate derivatives include Interest Rate Swaps, forward rate agreements and exchange traded interest rate derivatives.

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Notes: 1) Denotes absolute value of loss which the Bank could suffer on account of a change in interest rates by 1% which however doesn’t capture the off-setting exposures between interest rate and currency derivatives. 2) PV01 exposures reported above may not necessarily indicate the interest rate risk the Bank is exposed to, given that PV01 exposures in Investments (which may offset the PV01 reflected above) do not form part of the above table. 3) The notional principal amount of foreign exchange contracts classified as trading at March 31, 2019 amounted to `2,816,549.88 million (previous year: 2,999,631.85 million). For these trading contracts, at March 31, 2019, marked to market position was asset of `40,879.82 million (previous year: 21,147.95 million) and liability of `42,674.09 million (previous year: `20,920.03 million). The notional principal amount of foreign exchange contracts classified as hedging at March 31, 2019 amounted to `17,548.88 million (previous year: `816.98 million). Credit exposure on forward exchange contracts at March 31, 2019 was `101,707.60 million (previous year: `93,577.45 million) of which exposure on CCIL is `55,019.15 million (previous year: `56,459.69 million). 18.6.6 Asset quality 18.6.6.1 Non-Performing Advances The details of movement of gross NPAs, net NPAs and provisions during the year ended March 31, 2019 and the year ended March 31, 2018 are given below :

(` in million) No. Particulars March 31, 2019 March 31, 2018 (i) Net NPA to Net Advances 1.86% 0.64 % (ii) Movement of NPAs (Gross) (a) Opening balance 26,268.02 20,185.57 (b) Additions (Fresh NPAs during the year) 79,703.31 82,157.37 Sub-total (A) 105,971.33 102,342.94 Less: (i) Up-gradations 11,149.95 33,264.06 (ii) Recoveries 11,306.45 35,724.93 (iii) Write-offs 4,689.33 7,085.93 Sub-total (B) 27,145.73 76,074.92 Gross NPAs (closing balance) (A-B) 78,825.60 26,268.02 (iii) Movement of Net NPAs (a) Opening Balance 13,127.46 10,722.68 (b) Additions during the year 50,002.04 68,015.64 (c) Reductions during the year 18,281.00 65,610.86 (d) Closing balance 44,848.50 13,127.46 (iv) Movement of provisions for NPAs (excluding provision on standard assets) (a) Opening balance 13,140.56 9,462.89 (b) Additions during the year 29,701.27 14,141.74 (c) Write-off/write back of excess provision 8,864.73 10,464.07 (d) Closing balance 33,977.10 13,140.56 The Bank does not have any advances which are outstanding in the books of the branches, but have been written-off (fully or partially) at Head Office level.

18.6.6.2 Provision coverage Ratio The provision coverage ratio of the Bank as at March 31, 2019 computed as per the RBI guidelines is 43.10% (previous year: 50.02%).

Annual Report 2018-19 223 Schedules forming part of Financial Statements

18.6.6.3 Divergence in Asset Classification and Provisioning for NPAs In terms of the RBI circular no. DBR.BP.BC.No.32/21.04.018/2018-19 dated April 1, 2019 banks are required to disclose the divergences in asset classification and provisioning consequent to RBI’s annual supervisory process in their notes to accounts to the financial statements, wherever either or both of the following conditions are satisfied: (a) the additional provisioning for NPAs assessed by RBI exceeds 10 per cent of the reported profit before provisions and contingencies for the reference period and (b) the additional Gross NPAs identified by RBI exceed 15 per cent of the published incremental Gross NPAs for the reference period. Based on the above, no disclosure on divergence in asset classification and provisioning for NPAs is required with respect to RBI’s annual supervisory process for FY2018.

18.6.6.4 Concentration of NPAs Exposure (Funded + Non Funded) of the Bank to top four NPA is `32,843.86 million as at March 31, 2019 (previous year `14,510.13 million).

18.6.6.5 Sector-wise Advances and NPA The details of Sector-wise Gross Advances and Gross NPAs as at March 31, 2019 and March 31, 2018 are given below:

(` in million) As at March 31, 2019 As at March 31, 2018 % of Gross % of Gross NPAs to NPAs to Sector Gross Gross Gross Gross Gross NPAs Gross Advances NPAs Advances Advances in Advances in that sector that sector Priority Sector Agriculture and Allied activities 111,749.39 1,898.74 1.70% 108,333.92 1,152.95 1.06 % Advances to industries sector 129,938.12 524.80 0.40% 101,882.22 559.16 0.55 % eligible as priority sector lending Gems and Jewellery 30,993.87 5.10 0.02% 24,830.95 - - Services 276,349.81 2,416.79 0.87% 215,285.26 764.18 0.35 % Personal Loans 179.12 11.57 6.46% 407.33 8.07 1.98% Others 23,134.42 142.80 0.62% 22,107.22 16.60 0.08 % Sub-Total (A) 541,350.86 4,994.69 0.92% 448,015.95 2,500.96 0.56 % Non-Priority Sector Agriculture and Allied activities 40,838.96 1,436.64 3.52% 5,319.14 - - Industry 1,015,658.40 49,271.25 4.85% 1,037,517.44 22,282.04 2.15 % Construction 123,099.91 6,533.30 5.31% 109,338.86 2,576.69 2.36 % Electricity (generation- 128,619.87 6,674.29 5.19% 185,688.75 7,539.25 4.06 % transmission and distribution) Services 687,709.95 21,678.71 3.15% 450,248.18 1,060.75 0.24 % Commercial Real Estate 238,146.48 11,369.22 4.77% 146,172.40 115.93 0.08 % NBFCs 69,941.58 73.55 0.11% - - - Tourism, Hotel and Restaurants 120,061.67 99.24 0.08% 67,879.79 108.00 0.16%- Personal Loans 43,403.39 514.21 1.18% 27,654.56 140.12 0.51 % Others 120,011.56 930.10 0.78% 79,723.91 284.15 0.36 % Sub-Total (B) 1,907,622.26 73,830.90 3.87% 1,600,463.23 23,767.06 1.49 % Total (A+B) 2,448,973.12 78,825.60 3.22% 2,048,479.18 26,268.02 1.28 %

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3.41 3.41 as at 2019 thereon 852.47 242.97 242.97 855.88 1,095.44 Provision March 31, in million) 1,098.85 ` ( - - - - – – – 22.74 22.74 Amount 242.97 31, 2019 950.06 242.97 972.80 1,193.03 1,215.77 as at March outstanding 1 1 March 31 of the FY 7 4 2 6 – – – – – – – 2 5 No. of No. Restructured Accounts as on Restructured borrowers – – – – – (5.51) (5.51) (49.78) thereon (49.78) (200.79) Provision (206.30) (250.57) (256.08) – – – – (5.51) (5.51) (16.06) (16.06) Amount (455.24) (874.47) (874.47) (460.75) the FY (1,345.77) (1,351.28) outstanding - (1) (1) – – – – – – (2) (2) (3) (3) No. of No. restructured accounts during Write-offs / Sale / Recovery of / Sale Write-offs borrowers ------thereon Provision ------Amount outstanding ------No. of No. Upgradations to restructured standard category during the FY borrowers ------– (1.94) (1.94) 146.38 146.38 thereon (144.44) (144.44) Provision ------– (38.79) (38.79) 243.97 243.97 Amount (205.18) (205.18) outstanding ------1 (1) – accounts during the FY 1.00 (1.00) No. of No. Downgradations of restructured borrowers ------1.47 1.47 289.78 289.78 291.25 291.25 thereon Provision ------0.20 0.20 0.20 0.20 Amount outstanding ------– No. of No. borrowers Fresh restructuring during the year - - - - -

51.72 51.72 617.10 146.38 146.38 815.21 248.48 865.58 31, 2018 248.48 at March Provision 1,063.68 thereon as - - - - - 1,161.13 913.27 913.27 243.97 243.97 248.48 Amount 31, 2018 248.48 1,409.61 2,318.37 2,566.85 as at March outstanding - - - - - 1 1 3 3 4 2 6 2 8 10 No. of No. Restructured Accounts as on Restructured April 1 of the FY (opening figures) borrowers There are no SME cases which have been restructured during the year ended March 31, 2019. There have been no accounts upgraded from restructured advances during the year ended March 31, 2019 The outstanding amount and number of borrowers as at March 31, 2019 is after considering recoveries sale assets during t he year. The above table pertains to advances and does not include investment in shares which are fully provided for. The provision in the above table includes general loan loss and other provisions held on restructured advances. restructured restructured accounts are disclosed under “Fresh restructuring during the year” and partial repayments in existing Additional facilities availed by borrowers in existing restructured movement in provisions the existing DBR.BP.BC.No.23/21.04.018/2015-16 of RBI Circular No. 3.4.2. (xii) of arithmetical accuracy as required by Para For the purpose accounts are disclosed under “Write-offs/ sale/ recovery of restructured accounts”, however, for the purpose of arithmetical accuracy, the number of existing borrowers availing additional the number of for the purpose of arithmetical accuracy, however, sale/ recovery of restructured accounts”, accounts are disclosed under “Write-offs/ facility or partial repayments have been ignored for presentation purpose. is disclosed under column fresh restructuring(for increase in provision) and write-off/sale/ recovery (for decrease during the year account as compared to opening balance, under the respective columns. and are not comparable with the additional facilities availed partial recovery disclosed The details of accounts Restructured during the year ended March 31, 2019 are given below: The details of accounts Restructured Type of Type Restructuring Asset Classification CDR Standard Substandard Doubtful Loss Total Others Standard Substandard Doubtful Loss Total Grand Total Standard Substandard Doubtful Loss Total No. 1 2 3 18.6.6.6 Restructured Accounts 18.6.6.6 Restructured A) Notes: 1. 2. 3. 4. 5. 6. 7.

Annual Report 2018-19 225 Schedules forming part of Financial Statements - - -

0.00 51.72 51.72 617.10 (0.00) 146.38 146.38 815.21 248.48 865.58 31, 2018 248.48 at March Provision 1,063.68 thereon as - - - in million

` 0.00 (0.00) 1,161.13 913.27 913.27 243.97 243.97 248.48 Amount 248.48 31, 2018 1,409.61 2,318.37 2,566.85 as at March outstanding - - - - - 1 1 3 3 4 2 6 2 8 March 31 of the FY 10 No. of No. Restructured Accounts as on Restructured borrowers - - - - - (7.17)

(7.65) (0.48) (77.51) (44.51) (85.16) (51.68) (33.00) thereon (33.48) Provision - - - - - (9.52) (39.81) (33.00) (185.19) (152.19) Amount (42.52) (30.29) (225.01) (182.49) outstanding during the FY ------(1) (1) (1) (1) (1) (1) (2) restructured accounts No. of No. Write-offs/Sale/Recovery of Write-offs/Sale/Recovery borrowers ------(20.74) (20.74) thereon (167.40) (167.40) (188.14) (188.14) Provision ------(52.93) (52.93) Amount (3,347.93) (3,347.93) (3,400.86) (3,400.86) outstanding ------(1) (1) (2) (2) (3) (3) No. of No. Upgradations to restructured standard category during the FY borrowers - - - - - – 36.60 212.29 thereon 243.51 455.80 (280.10) (280.10) (175.69) (212.29) Provision ------27 million in the amount outstanding. ` (37.51) 281.48 243.97 Amount (281.48) 1,526.70 (1,489.19) (1,489.19) 1,245.22 outstanding - - - - - – 1.00 accounts during the FY 2.00 6.00 4.00 (1.00) No. of No. (2.00) (5.00) (5.00) Downgradations of restructured borrowers - - - - - 3.99 3.99 69.19 109.79 109.79 442.78 487.37 thereon 556.56 373.59 Provision ------79.75 79.75 23.59 23.59 103.34 103.34 Amount outstanding ------– No. of No. borrowers Fresh restructuring during the year - - -

0.48 0.00 0.00 65.25 65.25 212.77 212.29 212.29 567.65 31, 2017 502.88 502.40 780.42 at March Provision thereon as - - - 9.52 0.00 97.44 97.44 (0.00) 281.48 281.48 291.00 Amount 31, 2017 5,710.46 5,700.94 5,798.38 6,089.38 as at March outstanding - - - - - 1 3 2 2 2 2 11 10 12 15 No. of No. Restructured Accounts as on Restructured April 1 of the FY (opening figures) borrowers Type of Type Restructuring Asset Classification CDR Standard Substandard Doubtful Loss Total Others Standard Substandard Doubtful Loss Total Grand Total Standard Substandard Doubtful Loss Total There are no SME cases which have been restructured during the year ended March 31, 2018. There have been 3 accounts upgraded from restructured advances during the year ended March 31, 2018. The outstanding amount and number of borrowers as at March 31, 2018 is after considering r ecoveries sale assets during the year. The above table pertains to advances and does not include investment in shares of net book value The provision in the above table includes general loan loss and other provisions held on restructured advances. restructured accounts are disclosed under “Write-offs/ restructured accounts are disclosed under “Fresh restructuring during the year” and partial repayments in existing Additional facilities availed by borrowers in existing restructured account as compared to opening movement in provisions the existing 3.4.2. (xii) of RBI circular no DBR.BP.BC.No.23/21.04.018/2015-16 For the purpose of arithmetical accuracy as required by Para sale/recovery of restructured accounts”, however, for the purpose of arithmetical accuracy, the number of existing borrowers availing additional facility or partial repayments have been ignored for presentation purpose. the number of existing for the purpose of arithmetical accuracy, however, sale/recovery of restructured accounts”, is disclosed under column fresh restructuring (for increase in provision) and write-off/ sale/ recovery decrease during the year are not comparable with additional facilities availed balance, partial recovery disclosed under the respective columns. No. 1 2 3 The details of accounts Restructured during the year ended March 31, 2018 are given below: The details of accounts Restructured Notes:- 1. 2. 3. 4. 5. 6. 7.

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B) Restructuring of Advances – Micro Small and Medium Enterprises.

There are no restructure advances during the year ended March 31, 2019 under Micro Small and Medium Enterprises

18.6.6.7 Disclosure of schemes for stressed assets – Flexible Structuring of Existing Loans (` in million) Exposure weighted average Amount of loans taken up for No. of duration of loans taken up for flexible structuring borrowers flexible structuring Period taken up Before After applying for flexibly Classified as Classified as applying flexible structuring Standard NPA flexible structuring structuring For the year ended March 31, 2019 - - - - - For the year ended March 31, 2018 1 848.40 - 2.5 years 7.2 years

18.6.6.8 Disclosures on Strategic Debt Restructuring Scheme (SDR) (accounts which are currently under the stand-still period) There are no account where SDR has been invoked in the Financial Year ending March 31, 2019 and March 31, 2018.

18.6.6.9 Disclosures on Change in Ownership outside SDR Scheme (accounts which are currently under the stand-still period) As of March 31, 2019 there was no account under the stand-still period in the outside Strategic Debt Restructuring Scheme. During the year ended March 31, 2018 one account was restructured as per resolution plan implemented in accordance with the revised framework issued by RBI through notification “Resolution of Stressed Assets – Revised Framework” dated February 12, 2018. However, the same has been subsequently classified as NPA as at March 31, 2019.

18.6.6.10 Disclosures on Change in Ownership of Projects Under Implementation There are no accounts where the Bank has decided to effect the change of ownership of projects under Implementation for the year ended March 31, 2019 and March 31, 2018.

18.6.6.11 Disclosures on the Scheme for Sustainable Structuring of Stressed Assets (S4A) as on March 31, 2019 There are no accounts where S4A has been implemented in the Financial Year ended March 31, 2019. Details of S4A implementation in the Financial Year ended March 31, 2018 provided below:

(` in million) No. of accounts Aggregate amount Amount outstanding Particulars where S4A has been Provision Held outstanding implemented In Part A In Part B Classified as 3 1,303.61 1066.80 236.81 253.17 Standard Classified as NPA - - - - -

Annual Report 2018-19 227 Schedules forming part of Financial Statements

18.6.6.12 Financial assets sold to Securitization Company/Reconstruction Company for Asset Reconstruction a) Details of Financial assets sold to Securitization/Reconstruction Company during the year ended March 31, 2019 are as follows: (` in million) Year Ended Year Ended Particulars March 31, 2019 March 31, 2018

(i) No. of accounts 2 8

Aggregate principal value (net of specific provisions) of accounts sold 5,450.56 15,803.78 (ii) to SC / RC Aggregate consideration (includes Net Book Value of Security 4,558.70 17,911.10 (iii) Receipts of `2,878.10 million (previous year: `12,114.88 million) Additional consideration realized in respect of accounts transferred in - - (iv) earlier years (v) Aggregate gain/(loss) over net book value* (891.86) 2,107.32

* As per the extant RBI guidelines, the Bank has not recognized the gains in the financial statements and has recorded the Security Receipts at Net Book Value (NBV). If the sale value is lower than the net book value, the entire loss has been written off in the year of sale.

b) Details of Investments held as Security Receipts received by sale of NPA to Securitization/Reconstruction Company as at March 31, 2019 and March 31, 2018 are as follows: (` in million) Backed by NPAs* sold by other Backed by NPAs* sold by the banks/ financial institutions/ Total Bank as underlying non-banking financial Particulars companies as underlying As at March As at March As at March As at March As at March As at March 31, 2019 31, 2018 31, 2019 31, 2018 31, 2019 31, 2018 Net Book value of 17,266.83 18,847.22 - - 17,266.83 18,847.22 investments in security receipts

* Includes all Security Receipts received by Bank on sale of assets as permitted under RBI circular DBOD.BP.BC.No. 98/21.04.132/2013-14 dated February 26, 2014.

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Schedules forming part of Financial Statements c) Details of ageing of Investments held as Security Receipts as at March 31, 2019 are as follows: (` in million) SRs issued more SRs issued within than 5 years ago SRs more than Past 5 Years but within past 8 years ago 8 years (i) Book Value of SRs backed by NPAs* sold by the 21,288.01 489.18 Bank as underlying Provision held against (i) 4,143.48 366.87 (ii) Book value of SRs backed by NPAs* sold by other - - 158.63 banks/ financial institutions/ non-banking financial companies as underlying Provision held against (ii) - - 158.63 Total (i) + (ii) 21,288.01 489.18 158.63

*Includes all Security Receipts received by Bank on sale of assets as permitted under RBI circular DBOD.BP.BC.No. 98/21.04.132/2013-14 dated February 26, 2014.

Details of ageing of Investments held as Security Receipts as at March 31, 2018 are as follows: (` in million) SRs issued more SRs issued within than 5 years ago SRs more than 8 Past 5 Years but within past 8 years ago years (i) Book Value of SRs backed by NPAs* sold by the 21,201.01 Bank as underlying - - Provision held against (i) 2,353.80 - - (ii) Book value of SRs backed by NPAs* sold by other - 176.96 banks/ financial institutions/ non-banking financial - companies as underlying Provision held against (ii) - - 176.96 Total (i) + (ii) 21,201.01 - 176.96

*Includes all Security Receipts received by Bank on sale of assets as permitted under RBI circular DBOD.BP.BC.No. 98/21.04.132/2013-14 dated February 26, 2014. 18.6.6.13 Non-performing financial assets purchased/ sold from/ to other bank The Bank has not purchased/sold any non-performing financial assets from/to another bank during the year ended March 31, 2019 and March 31, 2018.

18.6.6.14.A Provisions for Standard Assets Provision on standard advances for the year FY 2018-19 was `32,007.97 million. During the year based on review of Credit portfolio of the Bank, the Bank has identified certain performing accounts which have been faced with stress due to current market and liquidity condition. The Bank has created Contingency Provision of `21,000 million towards these identified accounts.

Provision on standard advances for the year FY 2017-18 was `9,493.91 million.

Annual Report 2018-19 229 Schedules forming part of Financial Statements

18.6.6.14.B Disclosure on Exposure to Infrastructure Leasing & Financial Services Limited (ILFS) and its group entities The following table sets forth the exposure in ILFS and group entities as at March 31,2019, as per requirement of the RBI circular number RBI/2018-19/175 DBR.BP.BC.No.37/21.04.048/2018-19 dated April 24, 2019.

(` in million) Amount Of (1), total amount of exposures which are NPAs as Provisions required to be made Provisions outstanding (1) per IRAC norms and not classified as NPA (2). as per IRAC norms. (3) actually held (4)

25,280.04 645.39 3,759.89 6,234.07

The Bank has non-fund based exposure `889.90 million on to this conglomerate.

18.6.7 Business ratios Business Ratios As at March 31, 2019 As at March 31, 2018 i) Interest income as a percentage to working funds1 9.00% 8.55% ii) Non interest income as a percentage to working funds1 1.40% 2.20% iii) Operating profit as a percentage to working funds1 2.47% 3.27% iv) Return on assets1 0.52% 1.78% v) Business (deposits + net advances) per employee2 (` in million) 232.74 213.02 vi) Profit per employee2 (` in million) 0.89 2.30

1 Working funds represents the average of total assets as reported in Return Form X to RBI under Section 27 of the Banking Regulation Act, 1949. 2 For the purpose of computation of business per employee (deposits plus advances), inter-bank deposits have been excluded and average employees have been considered.

18.6.8 Asset Liability Management The following table sets forth the maturity pattern of assets and liabilities of the Bank as on March 31, 2019 (` in million) Loans & Investment Maturity Buckets Deposits Borrowings FCY Assets FCY Liabilities Advances Securities 1 day 18,741.23 115,057.51 14,114.50 2,766.20 45,844.33 3,009.61 2 days to 7 days 25,450.36 82,235.40 72,695.90 11,443.21 143,295.26 44,405.33 8 days to 14 days 18,905.83 76,910.98 56,700.46 8,127.59 51,584.38 7,211.95 15 days to 30 days 87,805.53 49,944.03 93,871.31 25,199.10 8,897.66 24,760.44 31 days to 2 months 53,956.34 21,081.44 102,819.85 42,943.52 9,979.06 17,926.29 Over 2 to 3 months 59,965.66 20,424.66 93,756.82 51,850.79 10,069.68 30,538.71 Over 3 to 6 months 134,256.62 54,993.97 291,401.98 94,698.15 12,414.32 75,875.66 Over 6 to 12 months 267,698.90 81,453.84 532,865.04 80,783.27 15,576.34 87,206.34 Over 1 year to 3 years 815,539.91 106,228.31 259,174.09 225,747.43 68,904.81 137,663.10 Over 3 years to 5 years 458,421.60 173,169.29 744,942.50 239,219.02 61,780.53 75,666.30 Over 5 years 474,254.06 113,720.89 13,759.37 301,462.81 53,294.83 38,451.86 TOTAL 2,414,996.02 895,220.33 2,276,101.82 1,084,241.09 481,641.20 542,715.58

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The following table sets forth the maturity pattern of assets and liabilities of the Bank as on March 31, 2018 (` in million) Loans & Investment Maturity Buckets Deposits Borrowings FCY Assets FCY Liabilities Advances Securities 1 day 10,988.03 137,582.88 13,024.30 - 14,880.51 193.47 2 days to 7 days 13,100.67 30,880.58 82,984.05 49,556.74 17,967.18 10,924.44 8 days to 14 days 13,216.35 35,252.15 63,368.79 3,380.43 2,842.68 5,178.34 15 days to 30 days 72,905.99 75,887.61 81,897.55 14,135.49 19,366.13 13,097.10 31 days to 2 months 52,563.54 23,284.64 137,014.31 18,042.32 8,389.32 13,384.64 Over 2 to 3 months 62,912.23 22,200.05 115,962.90 33,629.88 12,158.69 27,379.05 Over 3 to 6 months 148,767.19 35,487.29 202,682.14 69,982.00 15,531.12 59,634.76 Over 6 to 12 months 265,795.20 61,563.74 389,251.43 24,335.08 25,143.58 39,802.43 Over 1 year to 3 years 708,650.71 44,110.38 181,873.32 131,991.66 45,377.19 61,440.64 Over 3 years to 5 years 358,786.63 134,284.60 719,657.50 101,783.36 72,149.10 93,754.96 Over 5 years 327,652.08 83,455.47 19,665.19 302,098.86 25,085.58 29,695.44 TOTAL 2,035,338.63 683,989.39 2,007,381.48 748,935.81 258,891.07 354,485.28 Classification of assets and liabilities under the different maturity buckets is based on the same estimates and assumptions as used by the Bank for compiling the return submitted to the RBI.

Maturity profile of foreign currency assets and liabilities is excluding Off Balance Sheet item.

18.6.9 Exposures The Bank has lending to sectors, which are sensitive to asset price fluctuations. Such sectors include capital market and real estate.

18.6.9.1 Exposure to Real Estate Sector The exposure, representing the higher of funded and non-funded limits sanctioned or outstanding to real estate sector, is given in the table below: (` in million) Sr. As at As at Particulars No. March 31, 2019 March 31, 2018 i) Direct exposure Residential Mortgages 61,423.70 37,895.13 Commercial Real Estate* 343,537.29 254,879.15 Of total Commercial real estate - exposure to residential real estate 226,018.49 174,818.07 projects Of total Commercial Real Estate-outstanding as advances 248,340.53 164,404.61 Investments in Mortgage Backed Securities (MBS) and other securitized exposures - Residential 3,767.22 757.85 - Commercial Real Estate - - ii) Indirect exposure Fund based and non fund based exposures on National Housing 128,267.61 63,456.04 Board and Housing Finance Companies TOTAL 536,995.81 356,988.17

*Commercial real estate exposure classification is based on RBI circular DBOD.BP.BC.No. 42/08.12.015/2009-10 dated September 9, 2009.

Annual Report 2018-19 231 Schedules forming part of Financial Statements

18.6.9.2 Exposure to Capital Market The exposure representing the higher of funded and non-funded limits sanctioned or outstanding to capital market sector is given in the table below: (` in million) Sr. As at As at Particulars No. March 31, 2019 March 31, 2018 i) direct investment in equity shares, convertible bonds, convertible 442.60 204.88 debentures and units of equity-oriented mutual funds the corpus of which is not exclusively invested in corporate debt; ii) advances against shares/ bonds/ debentures or other securities or 6,154.06 3,736.64 on clean basis to individuals for investment in shares (including IPOs / ESOPs), convertible bonds, convertible debentures, and units of equity- oriented mutual funds; iii) advances for any other purposes where shares or convertible bonds - - or convertible debentures or units of equity oriented mutual funds are taken as primary security; iv) advances for any other purposes to the extent secured by the 5,295.06 2,237.61 collateral security of shares or convertible bonds or convertible debentures or units of equity oriented mutual funds i.e. where the primary security other than shares/ convertible bonds/ convertible debentures/ units of equity oriented mutual funds 'does not fully cover the advances; v) secured and unsecured advances to stockbrokers and guarantees 13,646.54 9,488.19 issued on behalf of stockbrokers and market makers;*

vi) loans sanctioned to corporate against the security of share / bonds/ 21,789.52 23,171.23 debentures or other securities or on clean basis for meeting promoter's contribution to the equity of new companies in anticipation of raising resources; vii) financing for acquisition of equity in overseas companies/financing for 44,218.55 12,949.56 acquisition of equity in Indian companies viii) bridge loans to companies against expected equity flows/issues; - - ix) underwriting commitments taken up by the banks in respect of primary - - issue of shares or convertible bonds or convertible debentures or units of equity oriented mutual funds; x) financing to stockbrokers for margin trading; - - xi) all exposures to Venture Capital Funds (both registered and 202.53 173.00 unregistered) Total Exposure to Capital Market 91,748.86 51,961.11

Capital market exposure is reported in line with Para 2.3 of RBI’s Master Circular on Exposure Norms dated July 1, 2015 (DBR.No.Dir. BC.12/13.03.00/2015-16). * out of the above `3,506.40 million is exposure to YES Securities (India) Ltd, which a subsidiary at the Bank.

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18.6.9.3 Risk Category wise Country Exposure As per the extant RBI guidelines, the country exposure (direct and indirect) of the Bank is categorised into various risk categories listed in the following table. The funded country exposure (net) of the Bank as a percentage of total funded assets for United States of America was 4.37% (March 31, 2018: 0.82%) and for United Kingdom was 1.11% (March 31, 2018: 0.94%). As the net funded exposure to United States of America and United Kingdom exceeded 1.0% of total funded assets, the Bank held a provision of `532.78 million on country exposure at March 31, 2019 (March 31, 2018: "NIL") based on RBI guidelines. (` in million) Exposure (net) Provision held Exposure (net) Provision held Risk Category as at as at as at as at March 31, 2019 March 31, 2019 March 31, 2018 March 31, 2018 Insignificant 374,555.20 532.78 223,896.21 - Low 65,596.60 - 54,802.82 - Moderately Low 2,391.78 - 1,750.32 - Moderate 1,549.65 - 704.61 - Moderate High - - - - High - - - - Very High - - - - TOTAL 444,093.23 532.78 281,153.96 -

18.6.9.4 Details of Single Borrower Limit (SBL) and Group Borrower Limit (GBL) During the year ended March 31, 2019 and March 31, 2018, the Bank has complied with the Reserve Bank of India guidelines on single borrower and borrower group limit. As per the exposure limits permitted under the extant RBI regulation, the Bank, with the approval of the Board of Directors, can enhance exposure to a single borrower or borrower group by a further 5 percent of capital funds.

During the year ended March 31, 2019, the Bank has not exceeded regulatory single borrower or group borrower exposure limit.

During the year ended March 31, 2018, with the prior approval of the Board of Directors, the Bank sanctioned enhancement in single borrower limit for Reliance Industries Limited (Reliance Group) within the ceiling of 20% of Capital Funds. As on March 31, 2019, the exposure to Reliance Industries Limited as a percentage of capital funds was 3.2% (March 31, 2018: 12.3%).

During the year ended March 31, 2018, with the prior approval of the Board of Directors, the Bank sanctioned enhancement in single borrower limit for Nayara Energy Limited - Erstwhile Essar Oil Limited (Rosneft Trafigura-UCP Consortium Group) within the ceiling of 20% of Capital Funds. As on March 31, 2019, the exposure to Nayara Energy Limited as a percentage of capital funds was 6.9% (March 31, 2018: 10.6%).

Annual Report 2018-19 233 Schedules forming part of Financial Statements

18.6.9.5 Details of factoring exposure The factoring exposure of the Bank as on March 31, 2019 is `6,059.85 million (previous year: `7,362.30 million).

Miscellaneous 18.6.10 Income Taxes Provisions made for Income Tax during the year (` in million) For the year ended For the year ended March 31, 2019 March 31, 2018 Current income tax expense 22,982.24 22,385.22 Deferred income tax credit (16,611.55) (2,687.77) TOTAL 6,370.69 19,697.45

18.6.11 Disclosure of penalties imposed by RBI (` in million) For the year ended March 31, 2019 Non-compliance with RBI directions on Time-bound implementation and 10.00 strengthening of Swift related operational controls. Penalty on accounts of non-compliance with RBI guidelines on issuance of co-branded open loop 1.13 prepaid cards* Penalties on account of counterfeit notes deposited by branches and currency chest 0.02 TOTAL 11.15

* Based on communication received from the RBI vide letter dated April 22, 2019

(` in million) For the year ended March 31, 2018 Penalty on account of non-compliance with the directions issued by RBI on Income Recognition 60.00 Asset Classification (IRAC) norms and delayed reporting of information security incident involving the outsourced ATM switch of the bank. Penalties on account of counterfeit notes/soiled notes remitted by branches and currency chest 0.07 TOTAL 60.07

18.6.12 Fees/Remuneration received from bancassurance Bank has earned `868.16 million from bancassurance business during year ended March 31, 2019 (previous year: `767.80 million).

18.6.13 Concentration of Deposits As at March 31, 2019, the deposits of top 20 depositors aggregated to `246,727.21 million (previous year: `244,366.30 million) (excluding certificate of deposits, which are tradable instruments), representing 10.84% (previous year: 12.17 %) of the total deposit base.

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18.6.14 Concentration of Advances As at March 31, 2019 the top 20 advances aggregated to `617,993.23 million (previous year: `484,353.89 million), representing 13.28% (previous year: 12.72%) of the total advances. For this purpose, advance is computed as per definition of Credit Exposure in RBI Master Circular on Exposure Norms DBR.No.Dir.BC.12/13.03.00/2015-16 dated July 1, 2015.

18.6.15 Concentration of Exposures As at March 31, 2019 the top 20 exposures aggregated to `677,765.38 million (previous year: `556,575.44 million), representing 13.54% (previous year: 13.68 %) of the total exposures. Exposure is computed as per definition of Credit and Investment Exposure in RBI Master Circular on Exposure Norms DBR.No.Dir.BC.12/13.03.00/2015-16 dated July 1, 2015.

18.6.16 Earnings Per Share (‘EPS’) The Bank reports basic and diluted earnings per equity share in accordance with Accounting Standard (AS) 20, “Earnings Per Share”. The dilutive impact is mainly due to stock options granted to employees by the Bank.

The computation of earnings per share is given below:

(` in million) Year ended Year ended Particulars March 31, 2019 March 31, 2018 Basic (annualized) Weighted average no. of equity shares outstanding 2,309,296,728 2,292,768,279 Net profit / (loss) `( ) 17,202.79 42,245.64 Basic earnings per share (`) 7.45 18.43 Diluted (annualized) Weighted average no. of equity shares outstanding 2,331,418,688 2,339,752,831 Net profit / (loss) `( ) 17,202.79 42,245.64 Diluted earnings per share (`) 7.38 18.06 Nominal value per share (`) 2 2

The difference between weighted average number of equity shares outstanding between basic and diluted in the above mentioned disclosure is on account of outstanding ESOPs.

Basic earnings per equity share has been computed by dividing net profit for the year attributable to the equity shareholders by the weighted average number of equity shares outstanding for the year. Diluted earnings per equity share has been computed by dividing the net profit for the year attributable to the equity shareholders by the weighted average number of equity shares and dilutive potential equity shares options outstanding during the year, except where the results are anti-dilutive. The dilutive impact is on account of stock options granted to employees by the Bank. There is no impact of dilution on the profits in the current year and previous year.

Annual Report 2018-19 235 Schedules forming part of Financial Statements

18.6.17 Overseas Assets, NPAs and Revenue The below table shows total assets, NPAs and revenue for the overseas branches of the Bank

(` in million) Year ended Year ended Particulars March 31, 2019 March 31, 2018 Total assets 331,594.88 181,840.46

Total NPAs - -

Total revenue 15,602.98 9,184.00

18.6.17.1 Repatriation of Profit During FY 2018-19, given adequate availability of liquidity at IBU and on account of high volatility in USD-INR movement which could expose Bank to translation risk to the extent of accumulated reserves at IBU, IBU repatriated an amount of USD 90 million (`6,459.43 million) to HO from its accumulated reserves. . The Bank has not recognized any gain in Profit and Loss Statement, as per RBI notification dated April 18, 2017, from Foreign Currency Translation Reserve (FCTR) on repatriation of accumulated profits/retained earnings.

18.6.18 Sponsored SPVs The Bank has not sponsored any SPV and hence there is no consolidation due to SPVs in Bank’s books.

18.6.19 Credit default swaps The Bank has not transacted in credit default swaps during the year ended March 31, 2019 (previous year: Nil).

18.6.20 Credit/Debit card reward points Provision for credit card and debit card reward points for the year ended March 31, 2019

Particulars ` in million Opening provision 112.12 Provision made during the year 180.73 Utilised/Write-back of provision (59.18) Closing provision 233.67

During financial year ending March 31, 2018, the Bank has expended `77.70 million for accumulated rewards points on credit and debit card.

The valuation of credit card and debit card reward points is based on actuarial valuation method obtained from an independent actuary.

18.6.21 Corporate Social Responsibility (CSR) a) Amount required to be spent by the Bank on CSR during the year `955.8 million (previous year: `772.21 million).

b) Amount spent towards CSR during the year and recognized as expense in the Profit and Loss account on CSR related activities is `537.86 million (previous year: `452.13 million), which comprise of following –

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(` in million) March 31, 2019 March, 31 2018 Amt unpaid Amt unpaid In cash Total In cash Total /provision /provision

Construction/acquisition of any asset ------On purposes other than (i) above 470.78 67.08 537.86 397.89 54.24 452.13

18.6.22 Staff retirement benefits The following table sets out the funded status of the Gratuity Plan and the amounts recognized in the Bank’s financial statements as of March 31, 2019 and March 31, 2018:

Gratuity a) Changes in present value of Obligations (` in million) As at As at March 31, 2019 March 31, 2018 Present Value of Obligation at the beginning of the year 1,129.14 873.21 Interest Cost 85.75 60.03 Current Service Cost 271.85 256.57 Past Service Cost - - Benefits Paid (80.28) (103.59) Actuarial (gain)/loss on Obligation 33.98 42.92 Present Value of Obligation at the end of the year 1,440.46 1,129.14

Changes in the fair value of plan assets: (` in million) For the year ended For the year ended March 31, 2019 March 31, 2018 Fair value of plan assets at the beginning of the year 1,144.35 870.91 Adjustment to Opening Balance - 4.25 Expected return on plan assets 80.05 60.92 Contributions - 321.34 Benefits paid (80.28) (103.59) Actuarial gain/( loss) on plan assets (26.25) (9.48) Fair value of plan assets at the end of the period 1,117.87 1,144.35

The Bank has entire contribution of Gratuity Fund as Investments with Insurance Companies. The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.

Annual Report 2018-19 237 Schedules forming part of Financial Statements

Net gratuity cost for the year ended March 31, 2019 and March 31, 2018 comprises the following components: (` in million) For the year ended For the year ended March 31, 2019 March 31, 2018 Current Service Cost 271.85 256.57 Interest Cost 85.75 60.03 Expected Return on plan assets (80.05) (60.92) Net Actuarial gain recognized in the year 60.24 52.40 Past Service Cost - - Expenses recognized 337.79 308.08

Experience History

(` in million) For the year For the year For the year For the year For the year ended ended ended ended ended March 31, 2019 March 31, 2018 March 31, 2017 March 31, 2016 March 31, 2015 (Gain)/Loss on obligation due to 63.57 (70.88) 46.39 14.11 33.71 change in assumption Experience (Gain)/Loss on (29.59) 113.80 30.12 (9.26) (51.13) obligation Actuarial Gain/(Loss) on (26.25) (5.21) 6.96 (14.25) (2.49) plan assets

The assumptions used in accounting for the gratuity plan are set out below: (` in million) For the year ended For the year ended March 31, 2019 March 31, 2018 Discount Rate 7.05% 7.60% Expected Return on Plan Assets 7.00% 7.00% Mortality IALM (2006-08) Ult IALM (2006-08) Ult Future Salary Increases 12.00% 12.00% Disability - - Attrition 13%-25% 13%-25% Retirement 60 yrs 60 yrs

Actuarial assumption on salary increase also takes into consideration the inflation, seniority, promotion and other relevant factors.

Position of plan asset/liability

For the year ended For the year ended March 31, 2019 March 31, 2018 Fair value of plan assets at the end of the period 1,117.87 1,144.35 Present Value of Obligation at the end of the year 1,440.46 1,129.15 Plan asset/(liability) (322.59) 15.20

The Bank is yet to determine future contribution to Gratuity fund for Financial Year 2019-20.

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National Pension Scheme 18.6.23 Segment Results The Bank has contributed `19.33 million for the year Pursuant to the guidelines issued by RBI on AS-17 ended March 31, 2019 (March 31, 2018: `15.22 million) (Segment Reporting) - Enhancement of Disclosures to NPS for employees who had opted for the scheme. dated April 18, 2007, effective from period ending The Bank has no liability for future fund benefits other March 31, 2008, the following business segments than its annual contribution for the employees who agree have been reported. to contribute to the scheme. ▲▲ Treasury: Includes investments, all financial markets Provident Fund (PF) activities undertaken on behalf of the Bank's customers, Proprietary trading, maintenance of The Bank has recognised in the profit and loss account reserve requirements and resource mobilisation `804.29 million for the year ended March 31, 2019 from other banks and financial institutions. (March 31, 2018: `716.81 million) towards contribution to the provident fund. ▲▲ Corporate/Wholesale Banking: Includes lending, deposit taking and other services offered to Compensated absence corporate customers. The Bank has recognised `169.60 million in the profit and ▲▲ Retail Banking: Includes lending, deposit taking and loss account for the year ended March 31, 2019 (March 31, other services offered to retail customers. 2018: `51.72 million) towards compensated absences. ▲▲ Other Banking Operations: Includes para banking activities like third party product distribution, merchant banking etc. Segmental results for the year ended March 31, 2019 are set out below: (` in million) Corporate/ Other Banking Business Segments Treasury Wholesale Retail Banking Total Operations Banking Segment Revenue 104,539.78 222,653.47 45,658.71 2,051.90 374,903.85 Less: Inter-segment (32,759.28) Revenue net of inter-segment 342,144.57 Result 35,460.35 14,180.12 (4,524.82) 916.64 46,032.30 Unallocated Expenses (22,458.83) Operating Profit 23,573.47 Income Taxes 6,370.68 Extraordinary Profit/(Loss) - Net Profit 17,202.79 Other Information: Segment assets 1,302,259.99 1,979,884.76 486,554.09 885.39 3,769,584.22 Unallocated assets 38,677.42 Total assets 3,808,261.64 Segment liabilities 1,081,751.87 1,411,797.46 947,394.05 1,082.29 3,442,025.66 Unallocated liabilities 366,235.98 Total liabilities 3,808,261.64

Other banking operations includes income from bancassurance business `868.16 million during year ended March 31, 2019.

Annual Report 2018-19 239 Schedules forming part of Financial Statements

Segmental results for the year ended March 31, 2018 are set out below: (` in million) Corporate/ Other Banking Business Segments Treasury Wholesale Retail Banking Total Operations Banking Segment Revenue 65,927.05 166,358.80 29,728.16 1,954.12 263,968.13 Less: Inter-segment 9,044.11 Revenue net of inter- segment 254,924.02 Result 29,460.99 54,748.04 (5,907.63) 1,108.21 79,409.61 Unallocated Expenses (17,466.51) Operating Profit 61,943.10 Income Taxes 9,697.46 Extraordinary Profit/(Loss) - Net Profit 42,245.64 Other Information: Segment assets 1,022,128.60 1,714,630.32 371,370.33 329.97 3,108,459.22 Unallocated assets 15,996.81 Total assets 3,124,456.03 Segment liabilities 751,075.32 1,261,531.12 750,850.50 4,724.60 2,768,181.54 Unallocated liabilities 356,274.49 Total liabilities 3,124,456.03

Other banking operations includes income from 18.6.24 Related Party Disclosures bancassurance business `767.80 million during year The Bank has transactions with its related parties ended March 31, 2018. comprising of subsidiary, key management personnel and the relative of key management personnel Notes for segment reporting: 1. The business of the Bank is concentrated largely As per AS 18 “Related Party Disclosures”, notified under in India. Accordingly, geographical segment results Section 133 of the Companies Act, 2013, read together have not been reported in accordance with AS-17 with paragraph 7 of the Companies (Accounts) Rules (Segment Reporting). 2014, the Bank’s related parties for the year ended March 31, 2019 are disclosed below: 2. In computing the above information, certain estimates and assumptions have been made Subsidiary by the Management and have been relied upon by the auditors. ▲▲ Yes Securities (India) Limited 3. Income, expense, assets and liabilities have been ▲▲ Yes Asset Management (India) Limited either specifically identified with individual segment ▲▲ Yes Trustee Limited or allocated to segments on a systematic basis or classified as unallocated. Individuals having significant influence 4. The unallocated assets Includes tax paid in advance/ ▲▲ Mr. Rana Kapoor, Managing Director & CEO (from tax deducted at source and deferred tax asset. April 1, 2018 to January 31, 2019) 5. The unallocated liabilities include Share Capital, ▲▲ Mr. Ajai Kumar, Managing Director & CEO (from Reserves & Surplus and Tier 1 bond borrowings. February 1, 2019 to February 28, 2019) 6. Inter-segment transactions have been generally ▲▲ Mr. Ravneet Gill, Managing Director & CEO (from based on transfer pricing measures as determined March 1, 2019 to March 31, 2019) by the Management.

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Key Management Personnel (‘KMP’) (Whole-time Director) ▲▲ Mr. Rana Kapoor, Managing Director & CEO (from April 1, 2018 to January 31, 2019) ▲▲ Mr. Ajai Kumar, Managing Director & CEO (from February 01, 2019 to February 28, 2019) ▲▲ Mr. Ravneet Gill, Managing Director & CEO (from March 1, 2019 to March 31, 2019)

Enterprise where relative of whole-time director having significant influence ▲▲ BW Businessworld Media Private Limited and Apex Club India Private Limited

The following represents the significant transactions between the Bank and such related parties including relatives of above mentioned KMP during the year ended March 31, 2019:

(` in million) Enterprise Relatives of Whole-time where Whole-time Maximum directors/ Maximum Maximum relative of directors/ Items/Related Party Balance individual Balance Balance whole-time Subsidiaries individual Category during the having during the during the director having year significant year year having significant influence significant influence influence Deposits 527.71* 33,003.57 3.06 * 15.62 Advances (Overdraft) 1,024.17* 1,035.91 Investment 2,240.00* 2,240.00 Interest received 41.02 Interest paid 44.29 0.52 Reimbursement of 17.57 Cost incurred Receiving of services 8.22 5.46 Dividend paid 270 Payable to subsidiary 2.70 Receivable from 3.11 subsidiary Sale of Assets 0.64

* Represents outstanding as of March 31, 2019

# During the year, Bank has made additional investment in two subsidiaries, YES Securities (India) Limited and YES Asset Management (India) Limited for `990 million and `195 million respectively.

During the year ended March 31, 2019, the Bank has contributed `537.86 million (previous year `452.13 million) to YES Foundation. YES Foundation is an independent public charitable trust which undertakes social charitable activities. YES Foundation does not qualify as Related Party, as defined under the Accounting Standard 18 - Related Party Disclosure and RBI guidelines

Annual Report 2018-19 241 Schedules forming part of Financial Statements

The following represents the significant transactions between the Bank and such related parties including relatives of above mentioned KMP during the year ended March 31, 2018: (` in million) Enterprise Relatives of where Whole-time Whole-time relative of directors/ directors/ whole-time Maximum individual Maximum individual Maximum director Balance having Balance having Balance having Items/Related Party during the significant during the significant during the significant Category Subsidiaries year influence year influence year influence Deposits 495.44* 746.93 # # # # Investment 1,055.00* 1,055.00 Advances (Overdraft) 150.38* 374.00 Interest received 3.88 # # Interest paid 9.32 Reimbursement of 25.43 Cost incurred Receiving of services 8.34 # 6.02 Dividend paid # Payable to subsidiary 1.07 Receivable from 3.10 subsidiary Sale of fixed asset 5.24 * Represents outstanding as of March 31, 2018

# In Financial Year 2017-18 there was only one related party in the said category, hence the Bank has not disclosed the details of transactions in accordance with circular issued by the RBI on March 29, 2003 “Guidance on compliance with the accounting standards by banks”. 18.6.25 Operating Leases Lease payments recognized in the profit and loss account for the year ended March 31, 2019 was `3,613.24 million (Previous year: `4,041.06 million). During the year ended March 31, 2019, the Bank paid minimum lease payment `3,623.94 million (Previous year: `3,696.34 million).

The following table sets forth, for the period indicated, the details of future rental payments on operating leases.

(` in million) As at As at Lease obligations March 31, 2019 March 31, 2018 Not later than one year 3,461.65 3,674.42 Later than one year and not later than five years 9,751.31 14,583.08 Later than five years 12,418.84 16,627.33 TOTAL 25,631.80 34,884.83

The Bank does not have any provisions relating to contingent rent.

The terms of renewal/purchase options and escalation clauses are those normally prevalent in similar agreements. There are no undue restrictions or onerous clauses in the agreements.

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18.6.26 ESOP disclosures Effective from June 13, 2018, all new options have been granted under the YBL ESOS 2018 (which inter-alia Statutory Disclosures Regarding Joining consists of JESOP 2018, PESOP 2018 and MD & CEO Stock Option Scheme: Plan 2019). The YBL ESOS 2018 and plans formulated thereunder are in compliance with the SEBI (Share Based The Bank has Five Employee Stock Option Schemes viz. Employees Benefits) Regulations, 2014 as amended from time to time. Source of shares are primary in nature, ▲▲ Joining Employee Stock Option Plan II (JESOP II), since the Bank has been issuing new equity shares upon ▲▲ Joining Employee Stock Option Plan III (JESOP III), exercise of options. ▲▲ YBL ESOP (consisting of two sub schemes JESOP JESOP II and JESOP III were in force for employees IV / PESOP I) joining the Bank up to March 31, 2006 and March 31, ▲▲ YBL JESOP V / PESOP II (Consisting of three sub 2007 respectively. Grants under PESOP II had been schemes JESOP V / PESOP II / PESOP II -2010) discontinued w.e.f. January 20, 2010. Grants under JESOP IV/PESOP I and JESOP V/ PESOP II -2010 had ▲▲ YBL Employee Stock Option Scheme, 2018 (YBL been discontinued w.e.f. June 12, 2018 pursuant to ESOS 2018) [Consisting of YBL Joining Employee coming into effect of YBL ESOS 2018. However, any Stock Option Plan, 2018 (JESOP 2018); YBL options already granted under the abovementioned plans Performance Employee Stock Option Plan, 2018 would be valid in accordance with the terms & conditions (PESOP 2018); and YBL MD&CEO (New) Stock mentioned in the plans. Option Plan, 2019 (MD&CEO Plan 2019)]

In accordance with the various Employee Stock Option Plans/Schemes of the Bank as mentioned above, the Employees can exercise the options granted to them from time to time:

JESOP/PESOP ESOP Scheme Exercise period JESOP JESOP II 50% after 3 years and balance after 5 years from the Grant date JESOP III 50% after 3 years and balance after 5 years from the Grant date JESOP IV 50% after 3 years and balance after 5 years from the Grant date JESOP V 50% after 3 years and balance after 5 years from the Grant date MD&CEO Plan 2019 20%, 30% & 50% each year, from end of 1st year from the Grant date PESOP PESOP I 25% after each year from the Grant date PESOP II 30%, 30% & 40% after each year from the Grant date PESOP II - 2010 30%, 30% & 40% each year, from end of 3rd year from the Grant date JESOP 2018 50% after 3 years and balance after 5 years from the Grant date PESOP 2018 30%, 30% & 40% each year, from end of 3rd year from the Grant date Options under all the aforesaid plans are granted for a term of 10 years (inclusive of the vesting period) and are settled with equity shares being allotted to the beneficiary upon exercise.

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A summary of the status of the Bank’s stock option plans as on March 31, 2019 and March 31, 2018 is set out below:

As at March 31, 2019 As at March 31, 2018 PESOP JESOP PESOP JESOP Options outstanding at the beginning of the year 46,257,335 15,963,100 64,802,165 20,614,950 Granted during the year 365,000 5,940,000 3,847,500 1,697,500 Exercised during the year 9,265,020 2,800,774 15,590,830 4,947,350 Forfeited/lapsed during the year 2,338,200 847,500 6,801,500 1,402,000 Options outstanding at the end of the year 35,019,115 18,254,826 46,257,335 15,963,100 Options exercisable 18,701,265 3,901,451 18,413,585 2,277,350 Weighted average exercise price (`) 70.84 106.08 64.76 74.59 Weighted average remaining contractual life of 1.50 1.86 1.78 1.82 outstanding option (yrs)

The Bank has charged Nil amount, being the intrinsic value of the stock options granted for the year ended March 31, 2019 and March 31, 2018. Had the Bank adopted the Fair Value method (based on Black- Scholes pricing model), for pricing and accounting of options, net profit after tax would have been lower by` 375.18 million (previous year: `414.98 million), the basic earnings per share would have been `7.29 (previous year: `18.24) per share instead of `7.45 (previous year: `18.43) per share; and diluted earnings per share would have been `7.22 (previous year: `17.88) per share instead of `7.38 (previous year: `18.06) per share.

The following assumptions have been made for computation of the fair value of ESOP granted for the year ended March 31, 2019 and March 31, 2018.

For the year ended For the year ended March 31, 2019 March 31, 2018 Risk free interest rate 6.29% - 9.23% 6.29% - 9.23% Expected life 1.5 yrs - 7.5 yrs 1.5 yrs - 7.5 yrs Expected volatility 25.01% - 48.72% 25.01% - 48.72% Expected dividends 1.20% 1.20%

In computing the above information, certain estimates and assumptions have been made by the Management.

18.6.27 Deferred Taxation The deferred tax asset of `25,329.14 million as at March 31, 2019 and `8,717.59 million as at March 31, 2018, is included under other assets and the corresponding credits have been taken to the profit and loss account.

The components that give rise to the deferred tax asset included in the balance sheet are as follows:

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(` in million) As at As at Particulars March 31, 2019 March 31, 2018 Deferred tax asset Depreciation 598.64 415.56 Provision for gratuity and unutilized leave 391.24 208.24 Provision for Non Performing Assets 9,779.42 2,926.75 Amortization of premium on HTM securities 1,035.72 1,025.76 Provision for standard advances 11,119.17 3,220.59 Other Provisions 2,404.94 920.69 Deferred tax asset 25,329.13 8,717.59

18.6.28 Provisions and Contingencies

The breakup of provisions of the Bank for the year ended March 31, 2019 and March 31, 2018 are given below:

(` in million) For the year ended For the year ended Particulars March 31, 2019 March 31, 2018 Provision for taxation 6,370.68 19,697.46 Provision for investments 6,824.89 2,599.44 Provision for standard advances 22,514.06 1,687.43 Provision made/write-off for non-performing advances 25,669.54 10,788.29 Others Provisions* 2,767.12 462.88 TOTAL 64,146.28 35,235.50

* Other Provisions includes provision made against other assets.

18.7 Other Disclosures 18.7.1 Disclosure on Remuneration a) Information relating to the composition and mandate of the Nomination & Remuneration Committee. The Board of Directors of the Bank through its Nomination and Remuneration Committee (N&RC) exercises oversight & effective governance over the framing and implementing of the Compensation policy. The N&RC shall comprise a minimum of 3 Non-Executive Directors, majority being Independent Directors.

Composition of the N&RC of the Bank as on March 31, 2019 is as follows:

▲▲ Mr. Mukesh Sabharwal, Independent Director (Chairman)

▲▲ Mr. T. S. Vijayan, Independent Director

▲▲ Mr. Subhash Chander Kalia, Non-Executive Non-Independent Director The roles and responsibilities of the N&RC are as under -

1. To review the current Board composition, its governance framework and determine future requirements and making recommendations to the Board for approval;

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2. To examine the qualification, knowledge, skill sets 13. To devise a Policy on Board diversity; and experience of each director vis-a-vis the Bank's 14. To recommend to the Board a policy relating to, requirements and their effectiveness to the Board the remuneration for the directors, key managerial on a yearly basis and accordingly recommend to the personnel and other employees including Board for the induction of new Directors; performance/achievement bonus, perquisites, 3. To review: retirals, sitting fee, etc.; a) The composition of the existing Committees 15. To review the Bank's overall compensation of the Board and to examine annually whether structure and related polices with a view to there is any need to have a special committee attract, motivate and retain employees and review of directors to meet the business requirements compensation levels vis-à-vis other Banks and the of the Bank and accordingly recommend to the industry in general; Board for formation of a special committee. 16. To ensure the following while formulating the policy b) Review the Terms of Reference of the Board on the aforesaid matters: Level Committees and recommend the a) the level and composition of remuneration is changes therein, if any, to the Board; reasonable and sufficient to attract, retain and 4. To scrutinise nominations for Independent/ motivate directors, key managerial personnel Non-Executive Directors with reference to and senior management of the quality required their qualifications and experience and making to run the company successfully; recommendations to the Board for appointment/ b) relationship of remuneration to performance filling of vacancies; is clear and meets appropriate performance 5. To identify persons who are qualified to become benchmarks; and directors and who may be appointed in senior c) remuneration to Whole-time directors, key management in accordance with the criteria managerial personnel and senior management laid down, recommend to the Board their involves a balance between fixed and appointment and removal; incentive pay reflecting short and long-term 6. To Formulate criteria for evaluation of performance performance objectives appropriate to the of independent directors and the board of directors; working of the company and its goals; 7. To carry out evaluation of every director’s d) Recommend to the board all remuneration, in performance; whatever form, payable to ‘Senior Management’. 8. Whether to extend or continue the term of 17. To consider grant of Stock Options to employees appointment of the independent director, on the including employees of subsidiaries and administer basis of the report of performance evaluation of and supervise the Employee Stock Option Plans; independent directors; 18. To function as the Compensation Committee as 9. To validate 'fit and proper' status of all Directors on prescribed under the SEBI (Share Based Employee the Board of the Bank in terms of the Guidelines Benefits) Regulations, 2014 and is authorized issued by the RBI or other regulatory authorities; to allot shares pursuant to exercise of Stock Options by employees; 10. To develop and recommend to the Board Corporate Governance guidelines applicable to the Bank for 19. To review the Human Capital Capacity Planning incorporating best practices; on annual basis; 11. To implement policies and processes relating to 20. To review the list of risk takers on annual basis; Corporate Governance principles; 21. To review the HCM Policies and provide suitable 12. To formulate the criteria for determining guidance for additions/ modification/ deletions, if any; qualifications, positive attributes and 22. To review the Succession Planning; and independence of a director; 23. To perform any other functions or duties as stipulated by the Companies Act, Reserve Bank of

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India, Securities and Exchange Board of India, Stock 1. Individual performance based on the Exchanges and any other regulatory authority or Annual Performance Review (APR) under any applicable laws as may be prescribed process of the Bank. from time to time. 2. Business Unit performance in terms of financial outcomes, productivity, etc. b) Information relating to the design and structure of remuneration processes and the key features 3. Consideration of all types of risk factors and objectives of remuneration policy. and shall be symmetrical with risk outcomes as well as sensitive to the time The Bank has framed Compensation and Benefit horizon of risk. Policy based on the guidelines contained in the RBI circular DBOD No. BC.72/29.67.001/2011-12 4. Profitability of the Bank. dated January 13, 2012 which was approved by 5. Industry Benchmarking and consideration the Nomination and Remuneration Committee towards cost of living adjustment/inflation on January 7, 2013. The remuneration of MD&CEO/Whole-time Directors is in accordance The Bank subscribes to a ‘Sum-of-Parts’ with the above mentioned circular and shall be compensation methodology, which is reviewed basis RBI guidelines issued from time reflective of the Bank’s commitment and to time and approved by N&RC before obtaining philosophy of creating and sharing value with Regulatory approvals. its employee partners. The compensation philosophy of the Bank is aligned The sum-of-parts compensation comprises: to the organizational values aimed at encouraging Professional Entrepreneurship and reinforcing a Fixed Compensation strong culture promoting meritocracy, performance, potential and prudent risk taking. Variable Compensation in the form of Performance Bonus The Bank’s Remuneration policy is to position its pay structure competitively in relation to the Employee Stock Option Plans (ESOP) market to be able to attract and retain critical talent. The compensation strategy clearly endeavors to The Board of Directors of the Bank through differentiate performance significantly and link the its Nomination and Remuneration Committee same with quality and quantum of rewards. The Bank (N&RC) shall exercise oversight & effective also strives to create long-term wealth creation governance over the framing and implementing opportunities through stock option schemes. of the Compensation policy. Human Capital Management under the guidance of MD & Human Capital Management shall review the CEO shall administer the Compensation and policy annually or as required, based on changes Benefits structure in line with Industry practices in statutory, regulatory requirements and industry and statutory requirements as applicable practices pertaining to Compensation and Benefits. from time to time.

a) Description of the ways in which current and b) Description of the ways in which the future risks are taken into account in the Bank seeks to link performance during a remuneration processes. It should include the performance measurement period with levels nature and type of the key measures used to of remuneration and a discussion of the bank's take account of these risks. policy and criteria for adjusting deferred remuneration before vesting and after vesting. The broad factors taken into account for the Annual Review /revision of Fixed Compensation The Bank ensures that the compensation (TCC) & Performance Bonus are: remains adjusted for all types of risk, symmetrical with risk outcomes as well as sensitive to the time horizon of risk. Further, the

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compensation in all forms will be consistent The Bank subscribes to a ‘Sum-of-Parts’ with the risk alignment. compensation methodology, which is reflective of the commitment and philosophy of One of the key factors to be considered creating and sharing value with the employee for the Annual Review/revision of Fixed partners. The sum-of-parts compensation for Compensation (TCC) & Performance Bonus executives comprises: includes individual performance based on the Annual Performance Review (APR) process of Fixed Compensation (Total Cost to the Bank. The evaluation on risk management Company-TCC) – Includes value of perquisites. parameters is an integral part of the Annual Performance Review process, forming part of Variable compensation in the form of Key Result Areas of the executives with suitable Performance/Deferred Bonus – Variable pay weightage. The inputs for assessment on these shall be in the form of Performance Bonus parameters will be independently provided by which will be calculated as a percentage of the Risk Management function of the Bank. Fixed Pay. The evaluation on risk management parameters is an integral part of the Annual For the services pertaining to a given financial Performance Review process, forming part of year where variable pay is 50% or more, Key Result Areas of the executives with suitable 40-60% shall be deferred over minimum weightage. The inputs for assessment on these period of 3 years. In the event of a negative parameters will be independently provided by contribution, deferred compensation shall the Risk Management function of the Bank. be subject to appropriate malus/claw back arrangements as decided by the Board Employee Stock Options Plans – These are Remuneration Committee. Guaranteed bonus formulated on a mid to long-term basis by shall not be a part of the compensation plan. the Bank in accordance with SEBI and other Regulatory guidelines. The grant of ESOP shall The compensation for executives in Risk Control be under approval from MD & CEO, which and Compliance functions shall be independent shall be subsequently ratified by the Board of the business areas they oversee. Remuneration Committee.

The Bank shall not provide any facility or d) Quantitative Disclosures on Remuneration for funds or permit employees to insure or MD & CEO and other risk takers hedge their compensation structure to offset the risk alignment effects embedded in their There were 14 meetings of the N&RC held compensation arrangement. during the year ended March 31, 2019. The Bank had paid a remuneration of `3.35 c) Description of the different forms of variable milllion to the members of the N&RC for remuneration (i.e. cash, shares, ESOPs and attending the meetings of the N&RC. other forms) that the Bank utilizes and the rationale for using these different forms.

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(` in million) For the For the No. of year ended No. of year ended employee March 31, employees March 31, 2019 2018 a) (i) Number of employees having received a variable 5 35.35 8 78.50 remuneration award during the financial year. (refer Note below) (ii) Number and total amount of sign-on awards made during - - - - the financial year. (iii) Details of guaranteed bonus, if any, paid as joining/sign - - - - on bonus (iv) Details of severance pay, in addition to accrued benefits, - - - - if any. b) (i) Total amount of outstanding deferred remuneration, split 1 4.9 2 18.33 into cash, shares and share-linked instruments and other forms.(refer Note below) c) Breakdown of amount of remuneration awards for the financial year to show fixed and variable, deferred and non-deferred Total remuneration award 7 245.2 9 374.33 Of which Fixed Component 7 204.01 8 295.83 Of which Variable Component 4 41.19 8 78.50 Deferred 1 4.90 - - Paid 4 36.29 8 78.50 d) (i) Total amount of outstanding deferred remuneration and 1 4.90 2 18.33 retained remuneration exposed to ex post explicit and/or implicit adjustments. (refer Note below) (ii) Total amount of reductions during the financial year due 1 15.00 - - to ex-post explicit adjustments. (refer Note below) (iii) Total amount of reductions during the financial year due - - - - to ex-post implicit adjustments. (change in variable payout due to change in Market Conditions) (refer Note below) Notes: 1. Amounts disclosed represent variable pay paid during the year ended March 31,2019 and March 31, 2018 for services rendered by the risk takers during the year March 31, 2018 and March 31, 2017 respectively. As the bonus pool for the year ended March 31, 2019 has not yet been allocated and accordingly, the deferred component for the risk takers is yet to be determined. 2. Compensation for MD & CEO is as approved by the RBI and paid by the Bank to the MD & CEO. Compensation for other risk takers is as approved by the Bank. 3. For the Financial Year ended March 31, 2019, 5,150,000 ESOP were issued to 4 risk takers (previous year: 6,50,000 esops to 6 risk-taker).

18.7.2 Movement in Floating Provisions The Bank has not created or utilized any floating provisions during the financial year ended March 31, 2019 and financial year ended March 31, 2018. The floating provision as at March 31, 2019 was` Nil (previous year: ` Nil).

18.7.3 Drawdown on Reserves During the financial year ended March 31, 2019, the Bank has not drawn down any reserve. (previous year:` Nil).

Annual Report 2018-19 249 Schedules forming part of Financial Statements - - - Total Total Value 101.0% 175.08

in million) 1,837.52 ` 12,413.18 Weighted Weighted ( 60,797.80 20,669.51 12,238.09 51,626.20 384,410.16 60,043.54 54,544.20 93,916.22 42,290.02 62,635.32 594,715.91 505,991.52 505,991.52 500,799.69 405,079.68 Total Total Value Quarter ended June 30, 2018* June 30, 1,616.60 8,307.06 12,238.09 36,750.33 98,890.44 60,043.54 13,854.69 82,678.05 94,366.98 42,290.02 607,977.99 644,728.31 792,570.39 235,547.44 875,248.44 Unweighted 1,426,813.72 3,028,995.77 - - - - Total Total Value 99.4% 424.36

1,977.45 17,871.51 55,814.10 21,286.16 Weighted 91,837.77 65,575.01 59,016.48 73,958.43 18,295.87 36,023.66 67,552.46 377,584.85 617,694.26 398,871.02 522,841.33 522,841.33 525,856.49 - - Total Total Value Quarter ended 1,189.36 17,871.51 87,411.97 55,814.10 September 30, 2018* September 30, 85,144.66 811,017.20 28,251.28 73,958.43 39,549.03 19,060.87 25,956.45 171,477.36 896,161.86 655,750.06 695,299.10 Unweighted 1,544,650.89 3,255,087.59 - - - - Total Total Current Year Value 102.3% 803.47

2,083.16 64,319.15 31,354.21 Weighted Weighted 27,627.40 32,157.68 61,822.54 67,296.52 67,506.03 59,376.40 69,379.68 378,006.44 123,695.54 636,499.77 512,804.23 405,633.84 524,390.54 524,390.54 - - Total Total Value Quarter ended December 31, 2018* 2,688.78 64,319.15 31,354.21 16,735.07 41,663.30 18,093.98 110,509.61 67,506.03 672,965.17 34,042.99 797,928.34 104,065.59 186,478.72 714,628.47 1,631,159.58 908,437.95 Unweighted 3,372,510.08 - - - - Total Total Value 110.9% 581.53

2,246.73 67,776.73 Weighted Weighted 61,347.59 63,126.23 63,142.29 26,439.73 70,959.79 27,035.63 27,021.26 73,206.52 529,775.18 399,655.96 426,691.60 126,268.52 587,604.68 587,604.68 656,043.70 - - Total Total Value Quarter ended March 31, 2019* 11,087.13 2,908.19 71,144.40 67,776.73 63,126.23 26,439.73 44,934.58 837,189.70 29,347.92 108,142.54 109,662.81 709,597.88 754,532.46 Unweighted 243,933.45 945,332.24 1,608,657.39 3,416,733.87 Liquidity Coverage Ratio (LCR) Liquidity Coverage Ratio Total High Quality Liquid Assets (HQLA) Total deposits and from small business Retail customers, of which: deposits Stable stable deposits Less Unsecured wholesale funding, of which: Operational deposits (all counterparties) Non-operational deposits (all counterparties) Unsecured debt Secured wholesale funding Additional requirements, of which exposures and Outflows related to derivative other collateral requirements Outflows related to loss of funding on debt products Credit and liquidity facilities Other contractual funding obligations Other contingent funding obligations Cash Outflows Total reverse repos) Secured lending (e.g. exposures Inflows from fully performing Other cash inflows Cash Inflows Total HQLA TOTAL Net Cash Outflows Total (%) Liquidity Coverage Ratio Particulars High Quality Liquid Assets 1 Cash Outflows 2 (i) (ii) 3 (i) (ii) (iii) 4 5 (i) (ii) (iii) 6 7 8 Cash Inflows 9 10 11 12 13 14 15 18.7.4 The following table sets forth, the daily average of unweighted and weighted values for all quarters in FY2018-19. the average weighted and unweighted amounts are calculated taking simple of daily positions. * For all the quarters in current year,

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Schedules forming part of Financial Statements - - - - - Total Total Value 88.3% 806.87

in million) 3,042.41 31,363.15 Weighted Weighted 35,621.31 ` 14,831.27 ( 41,228.28 14,024.40 20,827.27 42,582.29 45,624.69 350,581.77 350,581.77 320,329.86 453,377.26 320,329.86 396,928.68 56,448.58 Previous Year - - Total Total Value Quarter ended June 30, 2017 * June 30, 9,487.66 8,068.73 31,363.15 35,621.31 57,198.63 60,848.12 14,024.40 110,993.16 22,093.13 642,052.75 1,087,179.77 425,822.88 486,671.00 Unweighted 642,052.75 2,278,847.47 203,813.10 - - - - - Total Total Value 90.6% 368.78

3,211.72 Weighted 37,219.86 17,963.84 45,133.09 12,839.88 44,734.58 30,497.92 13,208.66 48,344.81 333,869.15 415,471.42 470,655.12 376,294.19 376,294.19 333,869.15 55,183.70 - - - Total Total Value Quarter ended 5,709.79 3,687.82 September 30, 2017 * September 30, 37,219.86 87,865.41 12,839.88 16,527.70 30,497.92 64,234.38 56,335.38 451,330.92 682,228.78 Unweighted 1,166,913.98 515,565.30 682,228.78 2,417,443.47 181,420.65 - - - - - Total Total Value 96.3% 244.55

3,407.20 25,876.11 Weighted Weighted 46,225.14 15,948.33 16,192.89 48,432.35 40,445.29 48,498.59 51,839.55 340,451.08 420,824.31 420,824.31 340,451.08 503,207.24 436,885.85 66,321.39 - - - Total Total Value Quarter ended December 31, 2017 * 2,445.53 68,143.92 15,948.33 16,876.56 47,089.37 40,445.29 48,498.59 18,393.86 59,509.80 707,639.46 484,323.52 707,639.46 Unweighted 552,467.44 1,199,059.34 147,044.46 2,542,935.25 - - - - Total Total Value 102.1% 108.82

3,471.19 Weighted Weighted 52,135.62 19,024.83 42,835.91 16,840.22 54,076.79 37,900.50 16,949.04 50,399.92 55,606.81 343,544.81 539,602.19 468,477.25 468,477.25 80,736.41 458,865.78 362,569.64 - - Total Total Value Quarter ended March 31, 2018 * 1,088.21 81,518.76 12,096.76 76,099.31 42,835.91 16,840.22 54,076.79 17,928.43 69,423.82 521,356.17 64,696.90 732,851.35 1,315,133.32 Unweighted 590,780.00 808,950.66 189,051.56 2,798,965.95 Total High Quality Liquid Assets (HQLA) Total deposits and from small Retail business customers, of which: deposits Stable stable deposits Less Unsecured wholesale funding, of which: Operational deposits (all counterparties) Non-operational deposits (all counterparties) Unsecured debt Secured wholesale funding Additional requirements, of which exposures and Outflows related to derivative other collateral requirements Outflows related to loss of funding on debt products Credit and liquidity facilities Other contractual funding obligations Other contingent funding obligations Cash Outflows Total reverse repos) Secured lending (e.g. exposures Inflows from fully performing Other cash inflows Cash Inflows Total HQLA TOTAL Net Cash Outflows Total (%) Liquidity Coverage Ratio (i) (i) (i) (ii) (ii) (ii) (iii) (iii) Particulars High Quality Liquid Assets 1 Cash Outflows 2 3 4 5 6 7 8 Cash Inflows 9 10 11 12 13 14 15 The following table sets forth, the daily average of unweighted and weighted values for all quarters in FY2017-18. the average weighted and unweighted amounts are calculated taking simple of daily positions. * For all the quarters in current year,

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The Bank measures and monitors the LCR in line with the ALCO of the Bank channelizes various business Reserve Bank of India’s circular dated June 9, 2014 and segments of the Bank to target good quality asset November 28, 2014 on “Basel III Framework on Liquidity and liability profile to meet the Bank’s profitability Standards - Liquidity Coverage Ratio (LCR), Liquidity as well as Liquidity requirements with the help of Risk Monitoring Tools and LCR Disclosure Standards” as robust MIS and Risk Limit architecture of the Bank. amended for “Prudential Guidelines on Capital Adequacy ▲▲ Funding strategies are formulated by the ALCO and Liquidity Standards” dated March 31, 2015. of the Bank. The objective of the funding strategy The LCR guidelines aims to ensure that a bank maintains is to achieve an optimal funding mix which is an adequate level of unencumbered High Quality Liquid consistent with prudent liquidity, diversity of sources Assets (HQLAs) that can be converted into cash to meet and servicing costs. Accordingly, BSMG (Balance its liquidity needs for a 30 calendar day time horizon Sheet Management Group) of the Bank estimates under a significantly severe liquidity stress scenario. daily liquidity requirement of the various business At a minimum, the stock of liquid assets should enable segments and manages the same on consolidated the bank to survive until day 30 of the stress scenario, basis under ALCO guidance. With the help of by which time it is assumed that appropriate corrective Structural and Liquidity Statement prepared by the actions can be taken. Banks are required to maintain Bank, BSMG evaluates liquidity requirement and High Quality Liquid Assets of a minimum of 100% of its takes necessary action. Periodical reports are also Net Cash Outflows by January 1, 2019. However, with a placed before the ALCO for perusal and review. view to provide transition time, the guidelines mandate a minimum requirement of 60% w.e.f. January 1, 2015 ▲▲ The Bank’s HQLA comprises of Excess CRR, and a step up of 10% every year to reach the minimum Excess SLR, eligible foreign sovereign investments, requirement of 100% by January 1, 2019. Marginal Standing Facility (MSF) and Facility to Avail Liquidity for Liquidity Coverage Ratio (FALLCR) ▲▲ The adequacy in the LCR maintenance is an as permitted under prudential guidance and outcome of a conscious strategy of the Bank eligible Level 2 investments. The Bank has a very towards complying with LCR mandate ahead of limited exposure to liquidity risk on account of its the stipulated timelines. The maintenance of LCR, Derivatives portfolio. Further, the Bank believes that both on end of period and on a average basis, has all inflows and outflows which might have a material been on account of multiple factors viz. increase impact under the liquidity stress scenario have been in excess SLR, existing eligibility in Corporate considered for the purpose of LCR. Further, SLR Bond Investments, increase in Retail deposits and investments as well as Corporate Bond portfolio of increase in non callable deposits. the Bank considered for HQLA is also well diversified across various instruments and Liquid Asset Type ▲▲ The Board of Directors of the Bank has empowered Mix and should provide the Bank with adequate ALCO (Top Management Executive Committee) to and timely liquidity. monitor and strategize the Balance Sheet profile of the Bank. In line with the business strategy, ALCO The daily average LCR for quarter ending March 31, 2019 forms an Interest Rate/Liquidity view for the bank is 110.9% which is comfortably above RBI prescribed with the help of the economic analysis provided by minimum requirement of 100%. the in-house economic research team of the bank.

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18.7.5 Intra-Group Exposures The Bank has three subsidiary viz. "YES Securities (India) Limited, Yes Asset Management (India) Limited and Yes Trustee Limited ". Below mentioned are details of Intra-Group Exposure as of March 31, 2019 and March 31, 2018.

(` in million) As of As of Particulars March 31, 2019 March 31, 2018 Total amount of intra-group exposures 7,500.00 2,150.00 Total amount of top-20 intra-group exposures 7,500.00 2,150.00 Percentage of intra-group exposures to total exposure of the bank on 0.15% 0.05% borrowers/customers (%)

During the year ended 31 March, 2019 and 31 March, 2018, the intra-group exposures were within the limits specified by RBI.

18.7.6 Transfers to Depositor Education and Awareness Fund (DEAF)

(` in million) For the year ended For the year ended Particulars March 31, 2019 March 31, 2018 Opening balance of the amount transferred to DEAF 13.53 4.70 Add: Amounts transferred to DEAF during the year 20.06 8.83 Less: Amounts reimbursed by DEAF towards claims 0.75 - Closing balance of amounts transferred to DEAF 32.83 13.53

18.7.7 Investor Education and Protection Fund The unclaimed dividend amount due to be transferred to the Investor Education and Protection Fund (IEPF) during the year ended March 31, 2019 has been transferred without any delay.

18.7.8 Unhedged Foreign Currency Exposure of Bank's Customer The Bank has in place a policy on managing credit risk arising out of unhedged foreign currency exposures of its borrowers. The objective of this policy is to maximize the hedging on foreign currency exposures of borrowers by reviewing their foreign currency product portfolio and encouraging them to hedge the unhedged portion. In line with the policy, assessment of unhedged foreign currency exposure is a part of assessment of borrowers and is undertaken while proposing limits or at the review stage. Additionally, at the time of sanctioning limits for all clients, the Bank stipulates a limit on the unhedged foreign currency exposure of the client (as a % of total foreign currency exposure sanctioned by the Bank) after considering factors such as internal rating of the borrower, size, possibility of natural hedging, sophistication of borrower and maturity of borrower’s financial systems, relative size of unhedged foreign currency exposure with respect to total borrowings of the client, etc. Further, the Bank reviews the unhedged foreign currency exposure across its portfolio on a periodic basis. The Bank also maintains incremental provision and capital towards the unhedged foreign currency exposures of its borrowers in line with the extant RBI guidelines.

The Bank has maintained provision of `537.52 million (previous year of `560.49 million) and additional capital of 1,297.78 million (previous year of `1,710.94 million) on account of Unhedged Foreign Currency Exposure of its borrowers as at March 31, 2019.

Annual Report 2018-19 253 Schedules forming part of Financial Statements

18.7.9 Provisioning pertaining to Fraud Accounts The Bank has reported 107 cases of fraud in the financial year ended March 31, 2019 amounting to `1,939.69 million (Previous Year: 91 cases amounting to `9.51 million). The Bank has expensed off/provided for the expected loss arising from these frauds and does not have any unamortized provision.

18.7.10 Disclosure of complaints A. Customer Complaints

Year ended Year ended March 31, 2019 March 31, 2018 i) No. of Complaints pending at the beginning of the year 2,681 2,617 ii) No. of Complaints received during the year 110,301 84,580 iii) No. of Complaints redressed during the year 109,711 84,516 iv) No. of Complaints pending at the end of the year 3,271 2,681

Auditors have relied upon the information presented by management as above. B. Awards passed by the Banking Ombudsman

Year ended Year ended March 31, 2019 March 31, 2018 i) No. of unimplemented Awards at the beginning of the year Nil Nil ii) No. of Awards passed by the Banking Ombudsman during the year Nil Nil iii) No. of Awards implemented during the year Nil Nil iv) No. of unimplemented Awards at the end of the year Nil Nil

18.7.11 Dues to Micro and Small Enterprises Under the Micro, Small and Medium Enterprises Development Act, 2006 which came into force from October 2, 2006, certain disclosures are required to be made relating to Micro, Small and Medium enterprises. There have been `437.40 million worth bills which were paid with delays to micro and small enterprises. There have no demand of interest on these payments. The above is based on the information available with the Bank which has been relied upon by the auditors.

18.7.12 Securitization Transactions The Bank has not done any securitization transactions during the year ended March 31, 2019 and March 31, 2018.

18.7.13 Letter of comfort The Bank has not issued any letter of comfort which is not recorded as contingent liability during the year ended March 31, 2019 and March 31, 2018.

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18.7.14 Software Capitalized under Fixed Assets The Bank has capitalized software under Fixed Asset amounting to `1,578.12 million and `1,418.30 million during the financial year ended March 31, 2019 and March 31, 2018 respectively. (` in million) As at As at Particulars March 31, 2019 March 31, 2018 At cost at March 31st of preceding year 3,722.63 2,488.26 Additions during the year 1,578.12 1,418.30 Deductions during the year (3.99) (183.93) Depreciation to date (2,974.02) (1,939.86) Net block 2,322.74 1,782.77

18.7.15 Provision for Long-Term contracts The Bank has a process whereby periodically all long-term contracts (including derivative contracts) are assessed for material foreseeable losses. At the year end, the Bank has reviewed and recorded adequate provision as required under any law/accounting standards for material foreseeable losses on such long-term contracts (including derivative contracts) in the books of account and disclosed the same under the relevant notes in the financial statements.

18.7.16 PSLCs sold and purchased during the ended March 31, 2019 (` in million) 2018-19 2017-18 Particulars Purchased Sold Purchased Sold PSLC – Agriculture - - - - PSLC – SF / MF 96,000.00 - 58,000.00 - PSLC – Micro Enterprises - - - - PSLC – General 68,000.00 - 12,800.00 -

18.7.17 Disclosure on complains The Bank became aware in September 2018 through communications from stock exchanges of an anonymous whistle-blower complain alleging irregularities in the Bank’s operations, potential conflicts of interests in relation to the former MD and CEO and allegations of incorrect NPA classification. The Bank conducted an internal enquiry of these allegations, which was carried out by management and supervised by the Board of Directors. The enquiry resulted in a report that was reviewed by the Board in November 2018. Based on further inputs and deliberations in December 2018, the Audit Committee of the Bank engaged an external firm to independently examine the matter. The Bank, at the direction of the Audit Committee and with the assistance of this external firm, is continuing to analyze the allegations in the whistle-blower complaint and work is currently ongoing. Based on work done and findings till date, the Bank has not

Annual Report 2018-19 255 Schedules forming part of Financial Statements

identified any material financial statement implications. The Bank will consider the implications of ongoing work in the next financial year as the examination of this matter is completed.

18.7.18 Description of contingent liabilities

Sr. No. Contingent Liabilities Brief 1. Claims against the Bank not The Bank is a party to various legal and tax proceedings in the normal course acknowledged as debts of business. The Bank does not expect the outcome of these proceedings to have a material adverse effect on the Bank’s financial conditions, results of operations or cash flows. 2. Liability on account of forward The Bank enters into foreign exchange contracts, currency options, forward exchange and derivative contracts rate agreements, currency swaps and interest rate swaps with inter-bank participants and customers. Forward exchange contracts are commitments to buy or sell foreign currency at a future date at the contracted rate. Currency swaps are commitments to exchange cash flows by way of interest/principal in one currency against another, based on predetermined rates. Interest rate swaps are commitments to exchange fixed and floating interest rate cash flows. The notional amounts of financial instruments of such foreign exchange contracts and derivatives provide a basis for comparison with instruments recognized on the balance sheet but do not necessarily indicate the amounts of future cash flows involved or the current fair value of the instruments and, therefore, do not indicate the Bank’s exposure to credit or price risks. The derivative instruments become favorable (assets) or unfavorable (liabilities) as a result of fluctuations in market rates or prices relative to their terms. The aggregate contractual or notional amount of derivative financial instruments on hand, the extent to which instruments are favorable or unfavorable and, thus the aggregate fair values of derivative financial assets and liabilities can fluctuate significantly. 3. Guarantees given on behalf As a part of its commercial banking activities the Bank issues documentary of constituents, acceptances, credit and guarantees on behalf of its customers. Documentary credits such endorsements and other as letters of credit enhance the credit standing of the customers of the Bank. obligations Guarantees generally represent irrevocable assurances that the Bank will make payments in the event of the customer failing to fulfill its financial or performance obligations. 4. Other items for which the Bank is Purchase of securities pending settlement, capital commitments, amount contingently liable deposited with RBI under Depositor Education Awareness Fund (DEAF), bill re-discounting, Foreign Exchange Contracts (Tom & Spot) 5 PF Liability In February 2019, the honorable Supreme Court of India in its judgment clarified that certain special allowances should be considered to measure obligations under Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (the PF Act). The Bank has been legally advised that there are interpretative challenges on the application of judgment retrospectively and as such does not consider there is any probable obligations for past periods. Due to imperative challenges, the Bank has not disclosed contingent liability amount for past liability. Refer Schedule 12 for amounts relating to contingent liability.

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Prior period comparatives previous year’s figures have been regrouped where necessary to conform to current year classification.

For B S R & Co. LLP For and on behalf of the Board of Directors Chartered Accountants YES BANK Limited Firm’s Registration No: 101248W/W-100022

Venkataramanan Vishwanath Ravneet Gill Brahm Dutt Ajai Kumar Partner Managing Director & CEO Chairman Director Membership No: 113156 (DIN: 00091746) (DIN: 05308908) (DIN: 02446976)

Uttam Prakash Agarwal Raj Ahuja Shivanand R. Shettigar Director Group Chief Financial Group Company (DIN: 00272983) Officer Secretary Mumbai April 26, 2019

Annual Report 2018-19 257 Independent Auditor’s Report

To, principles generally accepted in India, of the consolidated The Members of YES BANK Limited state of affairs of the Group as at 31 March 2019, of its consolidated profit and consolidated cash flows for the REPORT ON THE AUDIT year then ended. OF THE CONSOLIDATED Basis for opinion FINANCIAL STATEMENTS We conducted our audit in accordance with the Standards Opinion on Auditing (‘SAs’) specified under Section 143 (10) of the Act. Our responsibilities under those SAs are further We have audited the consolidated financial statements of described in the Auditor’s Responsibilities for the Audit YES BANK Limited (hereinafter referred to as the "Holding of the consolidated financial statements Section of our Company" or "Bank") and its subsidiaries (Holding report. We are independent of the Group in accordance Company and its subsidiaries together referred to as “the with the Code of Ethics issued by the Institute of Group”), which comprise the consolidated balance sheet Chartered Accountants of India together with the as at 31 March 2019, the consolidated profit and loss ethical requirements that are relevant to our audit of the account, the consolidated cash flow statement for the consolidated financial statements under the provisions of year then ended, and notes to the consolidated financial the Act and the Rules thereunder, and we have fulfilled statements, including a summary of significant accounting our other ethical responsibilities in accordance with these policies and other explanatory information (hereinafter requirements and the Code of Ethics. We believe that referred to as “the consolidated financial statements”). the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. In our opinion and to the best of our information and according to the explanations given to us, and based on the consideration of report of the other auditor on Emphasis of matter separate financial statements of one subsidiary which was We draw attention to Note 18.19 to the consolidated audited by the another auditor, the aforesaid consolidated financial statements which describes the ongoing enquiry financial statements give the information required by the by the Holding Company into certain anonymous whistle Banking Regulation Act, 1949 as well as the Companies blower allegations. Act, 2013 (the ‘Act’) in the manner so required and give a true and fair view in conformity with the accounting Our opinion is not modified in respect of this matter.

Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matter How the matter was addressed in our audit Identification of Non-Performing Assets (‘NPAs’) and Provisions on Advances Charge: `20,836 million for year ended 31 March 2019 Provision: INR 33,977 million at 31 March 2019 Refer to the accounting policies in the Consolidated Financial Statements: “Significant Accounting Policies - use of estimates” and “Note 18.5.3 to the Consolidated Financial Statements: Advances”

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Key audit matter How the matter was addressed in our audit Significant estimates and judgment involved Our key audit procedures included: Design/controls Identification of NPAs and provisions in respect of NPAs and restructured advances are made based ▲▲ Assessing the design, implementation and on management’s assessment of the degree of operating effectiveness of key internal controls impairment of the advances subject to and guided by over approval, recording and monitoring of loans, the minimum provisioning levels prescribed under the monitoring process of overdue loans (including RBI guidelines with regard to the Prudential Norms on those which became overdue subsequent to Income Recognition, Asset Classification & Provisioning, the reporting date), measurement of provisions, prescribed from time to time. The provision on NPA are identification of NPA accounts and assessing the also based on the valuation of the security available. reliability of management information (including In case of restructured accounts, provision is made for overdue reports). In addition, for corporate loans erosion/diminution in fair value of restructured loans, we tested controls over the internal ratings process, in accordance with the RBI guidelines. In addition, the monitoring of stressed accounts including credit contingency provision that the Bank has established file review processes and review controls over in the current year on assets currently not classified as the approval of significant individual impairment NPAs is based on management’s judgment. provisions. ▲▲ Evaluated the design, implementation and operating We identified identification of NPAs and provision on effectiveness of key internal controls over the advances as a key audit matter because of the level valuation of security for NPAs and the key controls of management judgment involved in determining the over determination of the contingency provision provision (including the provisions on assets which are including documentation of the relevant approvals not classified as NPAs) and the valuation of the security along with basis and rationale of the provision. of the NPA loans and on account of the significance to ▲▲ Testing of management review controls over these estimates to the financial statements of the Bank. measurement of provisions and disclosures in financial statements. ▲▲ Involving our information system specialists in the audit of this area to gain comfort over data integrity and calculations, including system reconciliations. Substantive tests ▲▲ Test of details for a selection of exposures over calculation of NPA provisions including valuation of collaterals for NPAs as at 31 March 2019; the borrower-wise NPA identification and provisioning determined by the Bank and also testing related disclosures by assessing the completeness, accuracy and relevance of data and to ensure that the same is in compliance with the RBI guidelines with regard to the Prudential Norms on Income Recognition, Asset Classification & Provisioning. ▲▲ We also selected a number of loans to test potential cases of loans repaid by a customer during the period by fresh disbursement(s) to these higher risk loans.

Annual Report 2018-19 259 Key audit matter How the matter was addressed in our audit ▲▲ We selected a sample (based on quantitative and qualitative thresholds) of larger corporate clients where impairment indicators had been identified by management. We obtained management’s assessment of the recoverability of these exposures (including individual provisions calculations) and challenged whether individual impairment provisions, or lack of, were appropriate. This included the following procedures:

▲▲ Reviewing the statement of accounts, approval process, board minutes, credit review of customer, review of Special Mention Accounts reports and other related documents to assess recoverability and the classification of the facility; and ▲▲ For a risk based sample of corporate loans not identified as displaying indicators of impairment by management, challenged this assessment by reviewing the historical performance of the customer and assessing whether any impairment indicators were present. Information technology IT systems and controls Our key IT audit procedures included:

The Bank’s key financial accounting and reporting ▲▲ We focused on user access management, change processes are highly dependent on information systems management, segregation of duties, system including automated controls in systems, such that there reconciliation controls and system application controls exists a risk that gaps in the IT control environment could over key financial accounting and reporting systems. result in the financial accounting and reporting records ▲▲ We tested a sample of key controls operating over being misstated. Amongst, its multiple IT systems, five the information technology in relation to financial systems are key for its overall financial reporting. accounting and reporting systems, including system access and system change management, program In addition, large transaction volumes and the increasing development and computer operations. challenges to protect the integrity of the Bank’s systems ▲▲ We tested the design and operating effectiveness and data, cyber security has become a more significant of key controls over user access management risk in recent periods. which includes granting access right, new user creation, removal of user rights and preventive We have identified ‘IT systems and controls’ as key audit controls designed to enforce segregation of duties. matter because of the high level automation, significant number of systems being used by the management and ▲▲ For a selected group of key controls over financial the complexity of the IT architecture. and reporting systems, we independently performed procedures to determine that these control remained unchanged during the year or were changed following the standard change management process.

260 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

Key audit matter How the matter was addressed in our audit ▲▲ Other areas that were assessed included password policies, security configurations, system interface controls, controls over changes to applications and databases and that business users and controls to ensure that developers and production support did not have access to change applications, the operating system or databases in the production environment. ▲▲ Security configuration review and related tests on certain critical aspects of cyber security on network security management mechanism, operational security of key information infrastructure, data and client information management, monitoring and emergency management.

Valuation of Financial Instruments (Investments and Derivatives) Refer to the accounting policies in the Consolidated Financial Statements: “Significant Accounting Policies - use of estimates”, “Note 18.5.2 to the Consolidated Financial Statements: Investments” and “Note 18.5.6 to the Consolidated Financial Statements: Accounting for derivative transactions” Subjective estimates and judgment involved Our key audit procedures included: Investments Design/controls Investments are classified into ‘Held for Trading’ (‘HFT’), ‘Available for Sale’ (‘AFS’) and ‘Held to Maturity’ (‘HTM’) ▲▲ Assessing the design, implementation and categories at the time of purchase. Investments, which operating effectiveness of management’s key the Bank intends to hold till maturity are classified as internal controls over classification, valuation, and HTM investments. valuation models. Investments classified as HTM are carried at amortized ▲▲ Reading investment agreements/term sheets cost. Where, in the opinion of management, a diminution entered into during the current year, on a sample other than temporary, in the value of investments has taken basis, to understand the relevant investment terms place, appropriate provisions are required to be made. and identify any conditions that were relevant to the valuation of financial instruments. Investments classified as AFS and HFT are marked- ▲▲ Engaging our valuation specialists to assist us to-market on a periodic basis as per the relevant in evaluating the valuation models used by the RBI guidelines. Bank to value certain instruments and to perform, on a sample basis, independent valuations of the We identified valuation of investments as a key audit instruments and comparing these valuations with matter because of the management judgment involved the Bank’s valuations. in determining the value of certain investments (Bonds ▲▲ Assessed the appropriateness of the valuation and Debentures, Commercial papers and Certificate methodology and challenging the valuation model of deposits, security receipts) based on the policy and by testing the key inputs used such as pricing model developed by the Bank, impairment assessment inputs, measure of volatility and discount factors. for HTM book and the overall significant investments to Compared the valuation methodology to criteria in the financial statements of the Bank. the accounting standards/RBI guidelines.

Annual Report 2018-19 261 Key audit matter How the matter was addressed in our audit Derivatives Substantive tests The Bank has exposure to derivative products which ▲▲ For sample of instruments we re-performed are accounted for on fair value (mark-to-market) in the independent valuation where no direct observable books of account. inputs were used. We examined and challenged The valuation of the Bank’s derivatives, held at fair the assumptions used, by considering the alternate value, is based on a combination of market data and valuation method and sensitivity of other key factors. valuation models which often require a considerable ▲▲ Assessing whether the financial statement number of inputs. Many of these inputs are obtained disclosures appropriately reflect the Bank’s from readily available data, the valuation techniques for exposure to investments and derivatives valuation which use quoted market prices and observable inputs. risks with reference to the requirements of the Where such observable data is not readily available, then prevailing accounting standards and RBI guidelines. estimates are developed which can involve significant management judgment. Valuation of Financial Instruments (Investments and Derivatives) We identified assessing the fair value of derivatives as a key audit matter because of the degree of complexity involved in valuing certain financial instruments and the degree of judgment exercised by management in identifying the valuation models and determining the inputs used in the valuation models.

RESPONSIBILITIES OF INFORMATION OTHER MANAGEMENT AND THOSE THAN THE CONSOLIDATED CHARGED WITH GOVERNANCE FINANCIAL STATEMENTS AND FOR THE CONSOLIDATED AUDITOR’S REPORT THEREON FINANCIAL STATEMENTS The Holding Company’s management and Board of The Holding Company’s management and Board of Directors are responsible for the other information. Directors are responsible for the preparation and The other information comprises the information included presentation of these consolidated financial statements in the Holding Company’s Annual report, but does not in term of the requirement of the Act that give a true and include the consolidated financial statements and our fair view of the consolidated state of affairs, consolidated auditor’s report thereon. profit and consolidated cash flows of the Group in accordance with the accounting principles generally Our opinion on the consolidated financial statements accepted in India, including the Accounting Standards does not cover the other information and we do not specified under Section 133 of the Act, provisions of express any form of assurance conclusion thereon. Section 29 of the Banking Regulation Act, 1949 and the circulars and guidelines issued by Reserve Bank of In connection with our audit of the consolidated financial India (‘RBI’) from time to time. The respective Board of statements, our responsibility is to read the other Directors of the companies included in the Group are information and, in doing so, consider whether the other responsible for maintenance of adequate accounting information is materially inconsistent with the consolidated records in accordance with the provisions of the Act for financial statements or our knowledge obtained in the safeguarding of the assets of each Company and for audit or otherwise appears to be materially misstated. preventing and detecting frauds and other irregularities; If, based on the work we have performed and based on selection and application of appropriate accounting the audit report of the other auditor, we conclude that policies; making judgments and estimates that are there is a material misstatement of this other information, reasonable and prudent; and design, implementation and we are required to report that fact. We have nothing to report in this regard.

262 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

maintenance of adequate internal financial controls, that detecting a material misstatement resulting from were operating effectively for ensuring the accuracy and fraud is higher than for one resulting from error, completeness of the accounting records, relevant to the as fraud may involve collusion, forgery, intentional preparation and presentation of the consolidated financial omissions, misrepresentations, or the override of statements that give a true and fair view and are free from internal control. material misstatement, whether due to fraud or error, ▲▲ Obtain an understanding of internal control relevant which have been used for the purpose of preparation of to the audit in order to design audit procedures that the consolidated financial statements by the Directors of are appropriate in the circumstances. Under Section the Holding Company, as aforesaid. 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Group has In preparing the consolidated financial statements, the adequate internal financial controls with reference respective management and Board of Directors of the to consolidated financial statements in place and companies included in the Group are responsible for the operating effectiveness of such controls. assessing the ability of each Company to continue as a going concern, disclosing, as applicable, matters related ▲▲ Evaluate the appropriateness of accounting policies to going concern and using the going concern basis of used and the reasonableness of accounting accounting unless management either intends to liquidate estimates and related disclosures made by the Company or to cease operations, or has no realistic management. alternative but to do so. ▲▲ Conclude on the appropriateness of management’s use of the going concern basis of accounting in The respective Board of Directors of the companies preparing consolidated financial statements and, included in the Group are responsible for overseeing the based on the audit evidence obtained, whether financial reporting process of each Company. a material uncertainty exists related to events or conditions that may cast significant doubt on the AUDITOR’S RESPONSIBILITIES FOR appropriateness of this assumption. If we conclude THE AUDIT OF THE CONSOLIDATED that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related FINANCIAL STATEMENTS disclosures in the consolidated financial statements Our objectives are to obtain reasonable assurance about or, if such disclosures are inadequate, to modify our whether the consolidated financial statements as a whole opinion. Our conclusions are based on the audit are free from material misstatement, whether due to fraud evidence obtained up to the date of our auditor’s or error, and to issue an auditor’s report that includes report. However, future events or conditions may our opinion. Reasonable assurance is a high level of cause Group (company and subsidiaries) to cease to assurance, but is not a guarantee that an audit conducted continue as a going concern. in accordance with SAs will always detect a material ▲▲ Evaluate the overall presentation, structure and misstatement when it exists. Misstatements can arise from content of the consolidated financial statements, fraud or error and are considered material if, individually including the disclosures, and whether the or in the aggregate, they could reasonably be expected consolidated financial statements represent the to influence the economic decisions of users taken on the underlying transactions and events in a manner that basis of these consolidated financial statements. achieves fair presentation. As part of an audit in accordance with SAs, we exercise ▲▲ Obtain sufficient appropriate audit evidence professional judgment and maintain professional regarding the financial information of such entities skepticism throughout the audit. We also: or business activities within the Group to express an opinion on the consolidated financial statements, ▲▲ Identify and assess the risks of material misstatement of which we are the independent auditors. We of the consolidated financial statements, whether are responsible for the direction, supervision and due to fraud or error, design and perform audit performance of the audit of financial information procedures responsive to those risks, and obtain of such entities. For the other entity included in audit evidence that is sufficient and appropriate the consolidated financial statements, which have to provide a basis for our opinion. The risk of not been audited by another auditor, such other auditor

Annual Report 2018-19 263 remains responsible for the direction, supervision the consolidated financial statements, insofar as it relates and performance of the audit carried out by them. We to the amounts and disclosures included in respect of remain solely responsible for our audit opinion. Our this subsidiary and our report in terms of sub-Section responsibilities in this regard are further described (3) of Section 143 of the Act, insofar as it relates to the in para (a) of the Section titled ‘Other Matters’ in this aforesaid subsidiary is based solely on the report of audit report. the other auditor. We believe that the audit evidence obtained by us along Our opinion on the consolidated financial statements, and with the consideration of the audit report of the other our report on Other Legal and Regulatory Requirements auditor referred to in sub-paragraph (a) of the ‘Other below, is not modified in respect of the above matter with Matters’ paragraph below, is sufficient and appropriate to respect to our reliance on the work done and the report provide a basis for our audit opinion on the consolidated of the other auditor. financial statements.

We communicate with those charged with governance of REPORT ON OTHER LEGAL AND the Holding Company and such other entities included in REGULATORY REQUIREMENTS the consolidated financial statements of which we are the independent auditors regarding, among other matters, (A) As required by Section 143(3) of the Act, based the planned scope and timing of the audit and significant on our audit and the consideration of the report of audit findings, including any significant deficiencies in the other auditor on separate financial statements internal control that we identify during our audit. of one subsidiary as noted in the ‘Other Matters’ paragraph, we report, to the extent applicable, that: We also provide those charged with governance with a statement that we have complied with relevant (a) we have sought and obtained all the ethical requirements regarding independence, and information and explanations which to the best to communicate with them all relationships and other of our knowledge and belief were necessary matters that may reasonably be thought to bear on our for the purpose of our audit of the aforesaid independence, and where applicable, related safeguards. consolidated financial statements;

From the matters communicated with those charged (b) in our opinion, proper books of account as with governance, we determine those matters that were required by law relating to preparation of the of most significance in the audit of the consolidated aforesaid consolidated financial statements financial statements of the current period and are have been kept so far as it appears from our therefore the key audit matters. We describe these examination of those books and the report of matters in our auditor’s report unless law or regulation the other auditor; precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter (c) the consolidated balance sheet, the should not be communicated in our report because the consolidated profit and loss account, and adverse consequences of doing so would reasonably the consolidated cash flow statement dealt be expected to outweigh the public interest benefits of with by this Report are in agreement with the such communication. relevant books of account maintained for the purpose of preparation of the consolidated OTHER MATTERS financial statements; We did not audit the financial statements of one subsidiary, (d) in our opinion, the aforesaid consolidated whose financial statements reflect total assets of` 570 financial statements comply with the million as at 31 March 2019, total revenues of `39 million Accounting Standards specified under Section and net cash outflows amounting to `266 million for the 133 of the Act, to the extent they are not year ended on that date, as considered in the consolidated inconsistent with the accounting policies financial statements. These financial statements have prescribed by RBI; been audited by another auditor whose report has been furnished to us by the Management and our opinion on

264 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

(e) on the basis of the written representations iii. there have been no delay in transferring received from the directors of the Holding amounts to the Investor Education and Company as on 31 March 2019 taken on Protection Fund by the Holding Company record by the Board of Directors of the Holding or its subsidiary companies during the year Company and the reports of the statutory ended 31 March 2019. auditors of its subsidiary companies none of the directors of the Group companies are iv. The disclosures in the consolidated financial disqualified as on 31 March 2019 from being statements regarding holdings as well as appointed as a director in terms of Section dealings in specified bank notes during 164(2) of the Act; the period from 8 November 2016 to 30 December 2016 have not been made since (f) with respect to the adequacy of the internal they do not pertain to the financial year financial controls with reference to financial ended 31 March 2019. statements of the Holding Company and its subsidiary companies and the operating (C) With respect to the matter to be included in the effectiveness of such controls, refer to our Auditors’ Report under Section 197(16): separate Report in “Annexure A” In our opinion and according to the information and (B) With respect to the other matters to be included in explanations given to us and based on the report the Auditor’s Report in accordance with Rule 11 of of the statutory auditor of one subsidiary company the Companies (Audit and Auditors) Rules, 2014, in which was not audited by us, the remuneration paid our opinion and to the best of our information and during the current year by the subsidiary companies according to the explanations given to us and based to its directors is in accordance with the provisions on the consideration of the report of the other auditor of Section 197 of the Act. The remuneration paid on separate financial statements of one subsidiary, to any director by the subsidiary companies is not as noted in the ‘Other Matters’ paragraph: in excess of the limit laid down under Section 197 of the Act. The Ministry of Corporate Affairs has i. the consolidated financial statements disclose not prescribed other details under Section 197(16) the impact of pending litigations as at which are required to be commented upon by us. 31 March 2019 on its consolidated financial Further, the Holding Company is a banking company position of the Group – Refer Schedule 12 as defined under Banking Regulation Act, 1949. and Note 18.21 to the consolidated Accordingly, the requirements prescribed under financial statements; Section 197 of the Companies Act, 2013 do not apply to the Holding Company. ii. provision has been made in the consolidated financial statements, as required under the For B S R & Co. LLP applicable law or accounting standards, for Chartered Accountants material foreseeable losses, if any, on long-term Firm’s Registration No: 101248W/W-100022 contracts including derivative contracts – Refer Note 18.17 to the consolidated financial Venkataramanan Vishwanath statements in respect of such items as it Mumbai Partner relates to the Group; 26 April 2019 Membership No: 113156

Annual Report 2018-19 265 Annexure A to the Independent Auditor’s Report of even date on the consolidated financial statements of YES BANK Limited for the year ended 31 March 2019

Report on the Internal Financial Controls with reference and the timely preparation of reliable financial information, to the aforesaid consolidated financial statements as required under the Companies Act, 2013 (“the Act”). under Clause (i) of Sub-Section 3 of Section 143 of the Companies Act, 2013 (“the Act”) AUDITOR’S RESPONSIBILITY (Referred to in paragraph (A)(f) under ‘Report on Other Our responsibility is to express an opinion on the internal Legal and Regulatory Requirements’ Section of our financial controls with reference to consolidated financial report of even date) statements based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards OPINION on Auditing, prescribed under Section 143(10) of the Act, to the extent applicable to an audit of internal In conjunction with our audit of the consolidated financial financial controls with reference to consolidated financial statements of YES BANK Limited and its subsidiaries statements. Those Standards and the Guidance Note (collectively referred to as the ‘Group’) as of and for the require that we comply with ethical requirements and plan year ended 31 March 2019, we have audited the internal and perform the audit to obtain reasonable assurance financial controls with reference to consolidated financial about whether adequate internal financial controls with statements of YES BANK Limited (hereinafter referred reference to consolidated financial statements were to as “the Holding Company”) and its subsidiaries, established and maintained and if such controls operated as of that date. effectively in all material respects.

In our opinion, the Holding Company and its subsidiary Our audit involves performing procedures to obtain companies, have, in all material respects, adequate audit evidence about the adequacy of the internal internal financial controls with reference to consolidated financial controls with reference to consolidated financial financial statements and such internal financial controls statements and their operating effectiveness. Our audit of were operating effectively as at 31 March 2019, based internal financial controls with reference to consolidated on the internal financial controls with reference to financial statements included obtaining an understanding consolidated financial statements criteria established by of internal financial controls with reference to consolidated such companies considering the essential components of financial statements, assessing the risk that a material such internal controls stated in the Guidance Note on Audit weakness exists, and testing and evaluating the design of Internal Financial Controls Over Financial Reporting and operating effectiveness of the internal controls based issued by the Institute of Chartered Accountants of India on the assessed risk. The procedures selected depend (the “Guidance Note”). on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated MANAGEMENT’S financial statements, whether due to fraud or error. RESPONSIBILITY FOR INTERNAL We believe that the audit evidence we have obtained FINANCIAL CONTROLS and the audit evidence obtained by the other auditor of the relevant subsidiary company, in terms of their report The respective company’s management and Board of referred to in the Other Matters paragraph below, is Directors are responsible for establishing and maintaining sufficient and appropriate to provide a basis for our audit internal financial controls based on the internal financial opinion on the internal financial controls with reference to control with reference to consolidated financial statement consolidated financial statements. criteria established by the respective Company considering the essential components of internal control stated in the Guidance Note. These responsibilities MEANING OF INTERNAL FINANCIAL include the design, implementation and maintenance of CONTROLS WITH REFERENCE TO adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct FINANCIAL STATEMENTS of its business, including adherence to the respective A company's internal financial controls with reference to company’s policies, the safeguarding of its assets, consolidated financial statements is a process designed the prevention and detection of frauds and errors, the to provide reasonable assurance regarding the reliability accuracy and completeness of the accounting records, of financial reporting and the preparation of financial

266 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

statements for external purposes in accordance with misstatements due to error or fraud may occur and not generally accepted accounting principles. A company's be detected. Also, projections of any evaluation of the internal financial controls with reference to consolidated internal financial controls with reference to consolidated financial statements includes those policies and financial statements to future periods are subject to the procedures that (1) pertain to the maintenance of risk that the internal financial controls with reference records that, in reasonable detail, accurately and fairly to consolidated financial statements may become reflect the transactions and dispositions of the assets inadequate because of changes in conditions, or that the of the Company; (2) provide reasonable assurance degree of compliance with the policies or procedures that transactions are recorded as necessary to permit may deteriorate. preparation of financial statements in accordance with generally accepted accounting principles, and that OTHER MATTERS receipts and expenditures of the company are being made only in accordance with authorizations of management Our aforesaid reports under Section 143(3)(i) of the Act and directors of the company; and (3) provide reasonable on the adequacy and operating effectiveness of the assurance regarding prevention or timely detection internal financial controls with reference to consolidated of unauthorised acquisition, use, or disposition of the financial statements insofar as it relates to one subsidiary company's assets that could have a material effect on the company, is based on the corresponding report of the financial statements. auditor of this company.

INHERENT LIMITATIONS For B S R & Co. LLP Chartered Accountants OF INTERNAL FINANCIAL Firm’s Registration No: 101248W/W-100022 CONTROLS WITH REFERENCE TO FINANCIAL STATEMENTS Venkataramanan Vishwanath Mumbai Partner Because of the inherent limitations of internal financial 26 April 2019 Membership No: 113156 controls with reference to consolidated financial statements, including the possibility of collusion or improper management override of controls, material

Annual Report 2018-19 267 Consolidated Balance Sheet as at March 31, 2019

(` in thousands) As at As at Schedule March 31, 2019 March 31, 2018 Capital & Liabilities Capital 1 4,630,066 4,605,934 Reserves and surplus 2 264,244,035 252,919,138 Deposits 3 2,275,579,027 2,006,886,036 Borrowings 4 1,084,241,089 748,935,808 Other liabilities and provisions 5 179,901,880 111,149,620 TOTAL 3,808,596,097 3,124,496,536 Assets Cash and balances with Reserve Bank of India 6 107,977,369 114,257,489 Balances with banks and money at call and short notice 7 161,871,938 133,280,682 Investments 8 893,285,327 682,934,387 Advances 9 2,413,971,851 2,035,188,250 Fixed assets 10 8,298,874 8,372,959 Other assets 11 223,190,738 150,462,769 TOTAL 3,808,596,097 3,124,496,536 Contingent liabilities 12 6,541,617,385 5,818,302,701 Bills for collection 50,592,373 19,355,641 Significant Accounting Policies and Notes to Accounts forming 18 part of financial statements

As per our report of even date attached.

For B S R & Co. LLP For and on behalf of the Board of Directors Chartered Accountants YES BANK Limited Firm's Registration No: 101248W/W-100022

Venkataramanan Vishwanath Ravneet Gill Brahm Dutt Ajai Kumar Partner Managing Director & CEO Chairman Director Membership No: 113156 (DIN: 00091746) (DIN: 05308908) (DIN: 02446976)

Uttam Prakash Agarwal Raj Ahuja Shivanand R. Shettigar Director Group Chief Financial Group Company (DIN: 00272983) Officer Secretary Mumbai April 26, 2019

268 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

Consolidated Profit and Loss Account for the year ended March 31, 2019

(` in thousands) For the year ended For the year ended Schedule March 31, 2019 March 31, 2018 I. Income Interest earned 13 296,237,987 202,685,947 Other income 14 46,754,814 52,931,509 TOTAL 342,992,801 255,617,456 II. Expenditure Interest expended 15 198,112,872 125,294,301 Operating expenses 16 63,614,279 52,735,403 Provisions and contingencies 17 64,172,992 35,255,552 TOTAL 325,900,143 213,285,256 III. Profit Net profit for the year 17,092,658 42,332,200 Profit brought forward 103,695,292 79,189,628 TOTAL 120,787,950 121,521,828 IV. Appropriations Transfer to Statutory Reserve 4,300,697 10,561,409 Transfer to Capital Reserve 1,010,096 659,648 Transfer to Investment Reserve 6,707 - Transfer to Investment Fluctuation Reserve 539,066 - Dividend paid for previous year 6,223,989 5,488,101 Tax on Dividend paid for previous year 1,279,652 1,117,377 Balance carried over to balance sheet 107,427,743 103,695,292 TOTAL 120,787,950 121,521,828 Significant Accounting Policies and Notes to Accounts 18 forming part of financial statements Earning per share Basic (`) 7.40 18.46 Diluted (`) 7.33 18.09 (Face Value of Equity Share is `2/-)

As per our report of even date attached.

For B S R & Co. LLP For and on behalf of the Board of Directors Chartered Accountants YES BANK Limited Firm's Registration No: 101248W/W-100022

Venkataramanan Vishwanath Ravneet Gill Brahm Dutt Ajai Kumar Partner Managing Director & CEO Chairman Director Membership No: 113156 (DIN: 00091746) (DIN: 05308908) (DIN: 02446976)

Uttam Prakash Agarwal Raj Ahuja Shivanand R. Shettigar Director Group Chief Financial Group Company (DIN: 00272983) Officer Secretary Mumbai April 26, 2019 Annual Report 2018-19 269 Consolidated Cash Flow Statement for the year ended March 31, 2019

(` in thousands) Year ended Year ended March 31, 2019 March 31, 2018 Cash flow from Operating Activities Net profit before taxes 23,490,051 62,045,363 Adjustment for Depreciation for the year 3,054,514 2,323,569 Amortization of premium on investments 2,102,585 1,673,308 Provision for investments 6,824,889 2,599,443 Provision for standard advances 22,514,059 1,687,427 Provision/write-off of non-performing advances 25,669,535 10,792,641 Other provisions 2,767,116 397,075 (Profit)/Loss on sale of land, building and other assets (3,947) 12,891 (i) 86,418,802 81,531,717 Adjustments for: Increase/(Decrease) in Deposits 268,692,991 578,311,598 Increase/(Decrease) in Other Liabilities 38,421,426 (1,058,963) (Increase)/Decrease in Investments (159,318,010) (103,781,671) (Increase)/Decrease in Advances (404,453,136) (725,041,549) (Increase)/Decrease in Other assets (49,363,644) (25,122,220) (ii) (306,020,373) (276,692,805) Payment of direct taxes (iii) (26,131,440) (22,943,356) Net cash generated from/(used in) operating activities (A) (i+ii+iii) (245,733,011) (218,104,444) Cash flow from investing activities Purchase of fixed assets (3,031,859) (3,932,525) Proceeds from sale of fixed assets 55,375 91,050 (Increase)/Decrease in Held To Maturity (HTM) securities (59,960,403) (83,607,484) Net cash generated/(used in) from investing activities (B) (62,936,887) (87,448,959) Cash flow from financing activities Increase in Borrowings 313,708,194 241,003,505 Tier II Debt raised 30,420,000 70,000,000 Innovative Perpetual Debt raised (1,754,400) 54,150,000 Tier II Debt repaid during the year (5,430,400) (2,489,000) Proceeds from issuance of Equity Shares (net of share issue expense) 953,472 1,420,167 Dividend paid during the year (6,223,989) (5,488,101) Tax on dividend paid (1,279,652) (1,117,377) Net cash generated from/(used in) financing activities (C) 330,393,225 357,479,194 Effect of exchange fluctuation on translation reserve (D) 587,809 65,803 Net increase in cash and cash equivalents (A+B+C+D) 22,311,137 51,991,595

270 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

Consolidated Cash Flow Statement for the year ended March 31, 2019

(` in thousands) Year ended Year ended March 31, 2019 March 31, 2018 Cash and cash equivalents as at April 1st 247,538,171 195,546,577 Cash and cash equivalents as at March 31st 269,849,307 247,538,171 Notes to the Cash flow statement: Cash and cash equivalents includes the following Cash and Balances with Reserve Bank of India 107,977,369 114,257,489 Balances with Banks and Money at Call and Short Notice 161,871,938 133,280,682 Cash and cash equivalents as at March 31st 269,849,307 247,538,171

As per our report of even date attached.

For B S R & Co. LLP For and on behalf of the Board of Directors Chartered Accountants YES BANK Limited Firm's Registration No: 101248W/W-100022

Venkataramanan Vishwanath Ravneet Gill Brahm Dutt Ajai Kumar Partner Managing Director & CEO Chairman Director Membership No: 113156 (DIN: 00091746) (DIN: 05308908) (DIN: 02446976)

Uttam Prakash Agarwal Raj Ahuja Shivanand R. Shettigar Director Group Chief Financial Group Company (DIN: 00272983) Officer Secretary Mumbai April 26, 2019

Annual Report 2018-19 271 Schedules forming a part of Consolidated Financial Statements

(` in thousands) As at As at March 31, 2019 March 31, 2018 Schedule 1 - Capital Authorised Capital 3,000,000,000 equity shares of `2/- each 6,000,000 6,000,000 20,000,000 preference shares of `100/- each 2,000,000 2,000,000 Issued, subscribed and paid-up capital 2,315,033,039 equity shares of `2/- each 4,630,066 4,605,934 (March 31, 2018: 2,302,967,245 equity shares of `2/- each) [Refer Sch 18.6] TOTAL 4,630,066 4,605,934

(` in thousands) As at As at March 31, 2019 March 31, 2018 Schedule 2 - Reserves and Surplus I. Statutory Reserves Opening balance 44,633,403 34,071,994 Additions during the year 4,300,697 10,561,409 Deductions during the year - - Closing balance 48,934,100 44,633,403 II. Share Premium Opening balance 100,058,339 98,679,248 Additions during the year [Refer Sch 18.6] 929,340 1,379,091 Deductions during the year [Refer Sch 18.6] - - Closing balance 100,987,679 100,058,339 III. Capital Reserve Opening balance 4,524,481 3,864,833 Additions during the year 1,010,096 659,648 Deductions during the year - - Closing balance 5,534,577 4,524,481 IV. Investment Reserve Opening balance 226,197 226,197 Additions during the year 6,707 - Deductions during the year - - Closing balance 232,904 226,197

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(` in thousands) As at As at March 31, 2019 March 31, 2018 V. Foreign Currency Transalation Reserve Opening balance 25,486 (40,317) Additions during the year 587,809 65,803 Deductions during the year - - Closing balance 613,295 25,486 VI. Cash Flow Hedge Reserve Opening balance (244,057) (160,135) Additions during the year 218,734 (83,922) Deductions during the year - - Closing balance (25,323) (244,057) VII. Investment Fluctuation Reserve Opening balance - - Additions during the year 539,066 - Deductions during the year - - Closing balance 539,066 - VIII. Balance in Profit and Loss Account 107,427,739 103,695,291 TOTAL 264,244,035 252,919,138

(` in thousands) As at As at March 31, 2019 March 31, 2018 Schedule 3 - Deposits A. I. Demand Deposits i) From Banks 17,301,403 14,602,217 ii) From Others 268,020,176 273,633,590 II. Savings Bank Deposit 467,112,348 443,504,509 III. Term Deposits i) From banks 184,849,906 112,971,241 ii) From others (incl. CD's issued) 1,338,295,194 1,162,174,479 TOTAL 2,275,579,027 2,006,886,036 B. I. Deposits of branches in India 2,274,432,000 2,005,954,161 II. Deposits of branches outside India 1,147,027 931,875 TOTAL 2,275,579,027 2,006,886,036

Annual Report 2018-19 273 Schedules forming a part of Consolidated Financial Statements

(` in thousands) As at As at March 31, 2019 March 31, 2018 Schedule 4 - Borrowings I. Innovative Perpetual Debt Instruments (IPDI) and Tier II Debt A. Borrowing in India i) IPDI 90,020,000 91,560,000 ii) Tier II Borrowings 180,759,000 152,339,000 TOTAL (A) 270,779,000 243,899,000 B. Borrowings outside India i) IPDI - 325,875 ii) Tier II Borrowings 6,215,786 11,172,824 TOTAL (B) 6,215,786 11,498,699 TOTAL (A+B) 276,994,786 255,397,699 (1) II. Other Borrowings A. Borrowings in India i) Reserve Bank of India - 15,000,000 ii) Other banks 57,147,925 15,811,399 iii) Other institutions and agencies (2) 345,669,057 187,167,910 TOTAL (A) 402,816,982 217,979,309 B. Borrowings outside India (3) 404,429,321 275,558,800 TOTAL (A+B) 807,246,303 493,538,109 TOTAL (I+II) 1,084,241,089 748,935,808 (1) Secured borrowings are `4,996,813 thousands (March 31, 2018: `46,463,203 thousands). (2) Including `302,872,244 thousands of refinance borrowing (March 31, 2018:` 123,216,106 thousands) `16,450,000 thousands (March 31 2018: `16,450,000 thousands) of Green Infrastructure Bonds raised to fund 'Green Projects' and `21,350,000 thousands (March 31, 2018: `21,350,000 thousands) of Long-Term Infrastructure Bonds raised to finance affordable housing and infrastructure projects. (3) Includes bonds of `32,909,865 thousand (March 31, 2018: `38,974,842 thousand) of Medium-Term Notes issued from International Business Unit (IBU) in GIFT city Gujarat to fund its growth.

(` in thousands) As at As at March 31, 2019 March 31, 2018 Schedule 5 - Other Liabilities And Provisions I. Bills payable 3,913,805 9,151,490 II. Inter-office adjustments (net) - - III. Interest accrued 37,446,048 21,932,650 IV. Others (including provisions) - Provision for standard advances 32,007,968 9,493,909 - Country risk exposures 532,784 - - Others 106,001,275 70,571,571 TOTAL 179,901,880 111,149,620

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Schedules forming a part of Consolidated Financial Statements

(` in thousands) As at As at March 31, 2019 March 31, 2018 Schedule 6 - Cash and Balances with Reserve Bank of India I. Cash in hand 6,333,912 6,226,739 II. Balances with Reserve Bank of India - In current account 101,643,457 108,030,750 - In other account - - TOTAL 107,977,369 114,257,489

(` in thousands) As at As at March 31, 2019 March 31, 2018 Schedule 7 - Balances with Banks, Money at Call and Short Notice I. In India Balances with banks- i) in current accounts 2,157,843 787,042 ii) in other deposit accounts 790,390 189,134 Money at call and short notice i) with Banks - - ii) with other institutions - - iii) lending under reverse repo (RBI & Banks) 88,310,161 112,009,654 TOTAL (I) 91,258,393 112,985,830 II. Outside India i) in current account 39,148,020 14,494,277 ii) in other deposit account - - iii) money at call and short notice 31,465,525 5,800,575 TOTAL (II) 70,613,545 20,294,852 TOTAL (I+II) 161,871,938 133,280,682

Annual Report 2018-19 275 Schedules forming a part of Consolidated Financial Statements

(` in thousands) As at As at March 31, 2019 March 31, 2018 Schedule 8 - Investments (Net of Provisions) A. Investments in India i) Government Securities 553,611,120 488,860,831 ii) Other approved securities - - iii) Shares 429,168 643,782 iv) Debentures and bonds 154,985,441 145,045,609 v) Subsidiaries and/or joint ventures - - vi) Others (CPs, CDs, Security Receipts, Pass through certificates etc.) 61,130,681 38,030,003 TOTAL (I) 770,156,410 672,580,225 B. Investments outside India i) Government Securities 120,595,843 3,445,612 ii) Shares 9,421 - iii) Debentures and bonds 2,523,653 6,908,550 TOTAL (II) 123,128,917 10,354,162 TOTAL (I+II) 893,285,327 682,934,387

(` in thousands) As at As at March 31, 2019 March 31, 2018 Schedule 9 - Advances A. i) Bills purchased and discounted 42,078,951 39,543,292 ii) Cash credit, overdrafts and loans payable on demand 411,627,297 349,346,228 iii) Term loans 1,960,265,603 1,646,298,730 TOTAL 2,413,971,851 2,035,188,250 B. i) Secured by tangible assets (includes advances secured by fixed 1,960,480,829 1,477,525,720 deposits and book debt) ii) Covered by Bank/Government guarantees 10,366,160 5,996,099 iii) Unsecured (1) 443,124,862 551,666,431 TOTAL 2,413,971,851 2,035,188,250 1Includes advances of `128,510,880 thousands (March 31, 2018: `337,552,952 thousands) for which security documentation is either being obtained or being registered. As at March 31, 2019 advances amounting to `2,403,000 thousands (March 31, 2018: Nil) has been secured by intangible securities such as charge over the rights, licenses, authority, etc.

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(` in thousands) As at As at March 31, 2019 March 31, 2018 C. I. Advances in India i) Priority sectors 539,338,050 446,472,144 ii) Public sector 56,671 1,524,237 iii) Banks 674,817 1,214,227 iv) Others 1,685,204,048 1,441,912,028 TOTAL (I) 2,225,273,585 1,891,122,636 II. Advances outside India i) Due from Banks 431,707 1,716,986 ii) (a) Bills purchased and discounted - - (b) Syndicated loans 30,796,065 142,348,628 (c) others 157,470,494 - TOTAL (II) 188,698,266 144,065,614 TOTAL (I) + (II) 2,413,971,851 2,035,188,250

(` in thousands) As at As at March 31, 2019 March 31, 2018 Schedule 10 - Fixed Assets I. Premises At cost as on March 31st of preceding year 378,031 378,031 Additions during the year - - Deductions during the year - - Accumulated depreciation to date (14,704) (8,402) TOTAL (I) 363,327 369,629 II. Other Fixed Assets (including furniture and fixtures and software) At cost as on March 31st of preceding year 15,319,476 11,802,938 Additions during the year 3,245,135 3,963,415 Deductions during the year (259,173) (446,876) Accumulated depreciation to date (10,884,314) (8,037,673) TOTAL (II) 7,421,123 7,281,804 TOTAL (I+II) 7,784,450 7,651,433 Capital work-in-progress 514,423 721,526 TOTAL 8,298,874 8,372,959

Annual Report 2018-19 277 Schedules forming a part of Consolidated Financial Statements

(` in thousands) As at As at March 31, 2019 March 31, 2018 Schedule 11 - Other Assets I. Interest Accrued 39,050,909 25,169,413 II. Advance tax and tax deducted at source (net of provision) 4,894,170 1,721,287 III. Deferred tax asset (Refer Sch 18.14) 25,374,714 8,762,413 IV. Non-Banking assets aquired in satisfaction of claims 353,000 364,790 V Others 153,517,945 114,444,866 TOTAL 223,190,738 150,462,769

(` in thousands) As at As at March 31, 2019 March 31, 2018 Schedule 12 - Contingent Liabilities I. Claims against the bank not acknowledged as debts 549,157 116,436 II. Liability for partly paid investments - - III. Liability on account of outstanding forward exchange contracts 2,834,098,764 3,000,448,825 IV. Liability on account of outstanding derivative contracts - Single currency Interest Rate Swap 1,702,671,190 1,141,440,348 - Others 868,291,165 783,747,908 V. Guarantees given on behalf on constituents - in India 437,248,909 314,307,933 - Outside India - - VI. Acceptances, endorsement and other obligations 390,140,737 411,689,385 VII. Other items for which the bank is contingently liable - Purchase of securities pending settlement 3,622,750 9,068,982 - Capital commitment 2,984,859 2,942,928 - Amount deposited with RBI under Depositor Education and 32,834 13,533 Awareness Fund (DEAF) - Foreign exchange contracts (Tom & Spot) 300,477,020 154,526,423 - Bills Re-discounting 1,500,000 - TOTAL 6,541,617,385 5,818,302,701

Contingent Liability on account of outstanding forward exchange contracts and single currency interest rate swap as on March 31, 2019 includes notional amount of `2,035,934,447 thousands and `407,303,929 thousands (previous year: `2,315,099,034 thousands and `318,672,816 thousands) guaranteed by CCIL representing 71.84% and 23.92% (previous year: 77.16% and 27.92%) of total outstanding forward exchange contracts and single currency interest rate swaps respectively.

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(` in thousands) For the year ended For the year ended March 31, 2019 March 31, 2018 Schedule 13 - Interest Earned I. Interest / discount on advances / bills 229,185,385 154,778,487 II. Income on investments 60,484,215 41,025,311 III. Interest on balances with Reserve Bank of India and other inter-bank 3,975,738 5,160,730 funds IV. Others 2,592,649 1,721,419 TOTAL 296,237,987 202,685,947

(` in thousands) For the year ended For the year ended March 31, 2019 March 31, 2018 Schedule 14 - Other Income I. Commission, exchange and brokerage 36,352,664 42,070,717 II. Profit on the sale of investments (net) 3,174,838 5,134,739 III. Profit/(Loss) on the revaluation of investments (net) - - IV. Profit/(Loss) on sale of land, building and other assets 3,947 (12,892) V. Profit on exchange transactions (net) 1,570,297 2,315,709 VI. Income earned by way of dividends etc. from subsidiaries, companies - - and/or joint ventures abroad/in India VII. Miscellaneous income 5,653,068 3,423,236 TOTAL 46,754,814 52,931,509

(` in thousands) For the year ended For the year ended March 31, 2019 March 31, 2018 Schedule 15 - Interest Expended I. Interest on deposits 136,826,853 93,824,814 II. Interest on Reserve Bank of India / inter-bank borrowings / 60,764,723 29,840,501 Tier I and Tier II debt instruments III. Others 521,297 1,628,986 TOTAL 198,112,872 125,294,301

Annual Report 2018-19 279 Schedules forming a part of Consolidated Financial Statements

(` in thousands) For the year ended For the year ended March 31, 2019 March 31, 2018 Schedule 16 - Operating Expenses I. Payments to and provisions for employees 25,381,132 22,346,642 II. Rent, taxes and lighting 4,237,407 4,587,562 III. Printing and stationery 425,902 372,953 IV. Advertisement and publicity 662,134 965,047 V. Depreciation on Group's property 3,054,514 2,323,569 VI. Directors' fees, allowances and expenses 46,613 21,423 VII. Auditors' fees and expenses 25,229 15,917 VIII. Law charges 90,931 60,940 IX. Postage, telegrams, telephones, etc. 648,219 604,812 X. Repairs and maintenance 423,286 348,022 XI. Insurance 2,079,092 1,512,828 XII. Other expenditure 26,539,820 19,575,688 TOTAL 63,614,279 52,735,403

(` in thousands) For the year ended For the year ended March 31, 2019 March 31, 2018 Schedule 17 - Provisions & Contingencies I. Provision for taxation (Refer Sch 18.15) 6,397,393 19,713,163 II. Provision for investments 6,824,889 2,599,443 III. Provision for standard advances 22,514,059 1,687,427 IV. Provision/write-off for non-performing advances 25,669,535 10,792,641 V. Other Provisions 2,767,116 462,878 TOTAL 64,172,992 35,255,552

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18. SIGNIFICANT ACCOUNTING POLICIES AND NOTES FORMING PART OF THE ACCOUNTS FOR THE YEAR ENDED MARCH 31, 2019 18.1 Background 18.2 Principles of Consolidation YES BANK Limited (the ‘Bank’ or ‘YES BANK’) is a private The consolidated financial statements comprise the sector bank promoted by the late Mr. Ashok Kapur and financial statements of YES BANK Limited, and its Mr. Rana Kapoor. YES BANK is a publicly held bank subsidiaries, YES Securities (India) Limited, YES Asset engaged in providing a wide range of banking and Management (India) Limited and YES Trustee Limited financial services. YES BANK is a banking company which together constitute the ‘Group’. governed by the Banking Regulation Act, 1949. The Bank was incorporated as a limited company under The Bank consolidates its subsidiaries in accordance the Companies Act, 1956 on November 21, 2003. with Accounting Standard (‘AS’) 21, Consolidated The Bank received the licence to commence banking Financial Statements notified under Section 133 of the operations from the Reserve Bank of India (‘RBI’) on Companies Act, 2013, read together with paragraph 7 May 24, 2004. Further, YES BANK was included to the of the Companies (Accounts) Rules 2014 issued by the Second Schedule of the Reserve Bank of India Act, Ministry of Corporate Affairs to the extent applicable on 1934 with effect from August 21, 2004. Also the Bank a line-by-line basis by adding together the like items of has a branch at International Financial Services Centre assets, liabilities, income and expenditure. (‘IFSC’) at GIFT City, Gujarat (‘IBU’). The Bank classifies transactions undertaken by IBU as overseas operation. 18.3 Basis of preparation YES Securities (India) Limited was incorporated on The financial statements have been prepared in March 14, 2013 as a wholly owned subsidiary of accordance with requirements prescribed under the Third YES BANK Limited (YBL/Holding Company). The Company Schedule (Form A and Form B) of the Banking Regulation is a securities broker registered with Securities and Act, 1949. The accounting and reporting policies of Exchange Board of India since July 8, 2013. The Company The Group used in the preparation of these financial also got SEBI registration as Category I Merchant Banker statements conform to Generally Accepted Accounting w.e.f. September 3, 2015. The Company offers, inter alia, Principles in India (Indian GAAP), the guidelines issued trading/investment in equity, merchant banking and by the Reserve Bank of India (RBI) from time to time, the other financial products along with various value added accounting standards notified under Section 133 of the services. The Company is member of National Stock Companies Act, 2013, read together with paragraph 7 of Exchange (NSE) since May 2, 2013 and the Bombay the Companies (Accounts) Rules 2014 and Companies Stock Exchange (BSE) since June 11, 2013. (Accounting Standards) Amendment Rules, 2016 to the extent applicable and practices generally prevalent in the Yes Asset Management (India) Limited was incorporated banking industry in India. The Group follows the accrual on April 21, 2017 as a wholly owned subsidiary of method of accounting and the historical cost convention, YES BANK Limited (YBL/Holding Company). The Company unless otherwise stated by RBI guidelines. has entered into an investment management agreement with Yes Trustee Limited to act as the investment manager 18.4 Use of estimates for any funds to be launched by Yes Mutual Fund. The Company is seeking registration from SEBI to launch The preparation of financial statements requires the Mutual fund operations. management to make estimates and assumptions that are considered while reporting amounts of assets and Yes Trustee Limited was incorporated in Mumbai, India on liabilities (including contingent liabilities) as of the date May 3, 2017. The Company's principal activity is to act as of the financial statements and income and expenses trustee for funds (Yes Mutual Fund). during the reporting period. Management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Future results

Annual Report 2018-19 281 Schedules forming a part of Consolidated Financial Statements

could differ from these estimates. Any revision to ▲▲ Fee income from Investment banking/Merchant accounting estimates is recognized prospectively in banking services are recognized based on current and future periods. completion of milestone as per the engagement letter. Further Fee income in relation to public issues/ 18.5 Significant accounting policies other securities is recognized based on mobilization and intimation received from clients/intermediaries. 18.5.1 Revenue recognition ▲▲ Account opening income and other income is Revenue is recognized to the extent it is probable that the recognized on accrual basis. economic benefits will flow to the Group and the revenue ▲▲ Fee for subscription based services are recognized can be reliably measured. as earned on a pro rata basis over the term of the ▲▲ Interest income is recognized in the profit and loss plan. account on accrual basis, except in the case of non- ▲▲ Management fees and income from investments are performing assets and accounts under SDR / S4A. accounted for on accrual basis in accordance with Interest on non-performing assets and accounts the investment management agreement and SEBI under SDR / S4A is recognized as per the prudential (Mutual Fund) Regulations, 1996. norms of the RBI. Penal Interest is recognized upon certainty of its realization. ▲▲ Trusteeship fees are accounted for an accrual basis in accordance with the trust deed. ▲▲ Dividend income is recognized when the right to receive payment is established. 18.5.2 Investments ▲▲ Commission on guarantees issued by the Bank Classification and valuation of the Bank’s investments are is recognized as income over the period of the carried out in accordance with RBI Circular DBR.No.BP. guarantee. BC.6/21.04.141/2015-16 dated 1 July 2015. ▲▲ Commission on Letters of Credit (‘LC’) issued by the Accounting and Classification Bank is recognized as income at the time of issue of the LC. The Bank follows settlement date accounting for Investments. In compliance with RBI guidelines, all ▲▲ Income on non-coupon bearing discounted investments, are categorized as “Held for trading” (‘HFT’), instruments is recognized over the tenure of the “Available for sale” (‘AFS’) or “Held to maturity” (‘HTM’) at instrument on a straight-line basis. In case of coupon the time of its purchase. For the purpose of disclosure bearing discounted instruments, discount income is in the balance sheet, investments are classified as recognized over the tenor of the instrument on yield disclosed in Schedule 8 (‘Investments’) under six groups basis. (a) government securities (b) other approved securities ▲▲ In case of Bonds and Pass Through Certificates, (c) shares (d) bonds and debentures (e) subsidiaries and premium on redemption, if any, is amortized over the joint ventures and (f) others. tenure of the instrument on a yield basis. a) Cost of acquisition ▲▲ Revenue from financial advisory services is recognized in line with milestones achieved as per Costs such as brokerage pertaining to investments, terms of agreement with clients which is reflective of paid at the time of acquisition and broken period services rendered. interest are charged to the profit and loss account as per the RBI guidelines. ▲▲ Facility fees and loan processing fees are recognized when due and realizable. b) Basis of classification ▲▲ Other fees and commission are accounted for as Securities that are held principally for resale within and when they became due. 90 days from the date of purchase are classified ▲▲ Brokerage income is recognized as per contracted under the HFT category. Investments that The rate on execution of transaction on behalf of the Group intends to hold till maturity are classified customers on the trade date and is net off related under the HTM category, or as per RBI guidelines. sub brokerage expenses, service tax/GST and stock Securities which are not classified in the above exchange expenses. categories are classified under the AFS category.

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Schedules forming a part of Consolidated Financial Statements c) Transfer between categories classified under HTM has taken place, suitable provisions are made. Reclassification of investments from one category to the other, if done, is in accordance with RBI Treasury Bills, Commercial Paper and Certificates of guidelines. Transfer of scrips from AFS / HFT deposit being discounted instruments, are valued category to HTM category is made at the lower of at carrying cost. book value or market value. In the case of transfer of securities from HTM to AFS / HFT category, the Pass Through Certificates purchased for priority investments held under HTM at a discount are sector lending requirements are valued at Book transferred to AFS / HFT category at the acquisition Value in accordance with RBI guidelines. price and investments placed in the HTM category at a premium are transferred to AFS / HFT at the The market/fair value applied for the purpose of amortized cost. periodical valuation of quoted investments included in the AFS and HFT categories is the market price Transfer of investments from AFS to HFT or of the scrip as available from the trades/quotes on vice-a-versa is done at the book value. the stock exchanges and for Subsidiary General Depreciation carried, if any, on such investments is Ledger (‘SGL’) account transactions, the prices as also transferred from one category to another. periodically declared by Financial Benchmarks India Pvt. Ltd. (FBIL). d) Valuation Investments categorized under AFS and HFT The market/fair value of unquoted government categories are marked to market (MTM) on a securities included in the AFS and HFT category periodical basis as per relevant RBI guidelines. is determined as per the prices published by FBIL. Net depreciation, if any, in the category under the Further, in the case of unquoted bonds, debentures, classification mentioned in Schedule 8 (‘Investments’) pass through certificates (other than priority sector) is recognized in the profit and loss account. The net and preference shares, valuation is carried out appreciation, if any, in the category under each by applying an appropriate mark-up (reflecting classification is ignored, except to the extent of associated credit risk) over the Yield to Maturity depreciation previously provided. The book value of (‘YTM’) rates of government securities. Such mark individual securities is not changed consequent to up and YTM rates applied are as per the relevant periodic valuation of investments. rates published by FIMMDA / FBIL.

Investments received in lieu of restructured The Bank undertakes short sale transactions in advances scheme are valued in accordance Central Government dated securities in accordance with RBI guidelines. Any diminution in value on with RBI guidelines. The short position is reflected these investments is provided for and is not as the amount received on sale and is netted in the used to set off against appreciation in respect Investment schedule. The short position is marked of other performing securities in that category. to market and loss, if any, is charged to the Profit Depreciation on equity shares acquired and held by and Loss account while gain, if any, is ignored. The Group under restructuring scheme is provided Profit/Loss on settlement of the short position is as per RBI guidelines. recognized in the Profit and Loss account.

Investments classified under the HTM category are Units of Venture Capital Funds (VCF) held under carried at their acquisition cost and any premium AFS category are valued using the Net Asset Value over the face value, paid on acquisition, is amortized (NAV) shown by VCF as per the financial statement. on a straight-line basis over the remaining period The VCFs are valued based on the audited results to maturity. Amortization expense of premia on once in a year. In case the audited financials are investments in the HTM category is deducted from not available for a period beyond 18 months, the interest income in accordance with RBI Circular DBR. investments are valued at `1 per VCF. No.BP.BC.6/21.04.141/2015-16 dated July 1, 2015. Where in the opinion of management, a diminution, Quoted equity shares are valued at their closing price other than temporary in the value of investments on a recognized stock exchange. Unquoted equity

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shares are valued at the break-up value if the latest Non-Sovereign foreign currency Bonds are valued balance sheet is available, else, at `1 per company, using either Composite Bloomberg Bond Trader as per relevant RBI guidelines. (CBBT) price, Bloomberg Valuation Service (BVAL) price, Bloomberg Generic price (BGN), Last available At the end of each reporting period, security receipts CBBT pricing for the instrument or Proxy Bond issued by the asset reconstruction company are Pricing from Bloomberg in the chronological order valued in accordance with the guidelines applicable based on availability. to such instruments, prescribed by RBI from time to time. Accordingly, in cases where the cash Masala bonds are valued using either Composite flows from security receipts issued by the asset Bloomberg Bond Trader (CBBT) price, Bloomberg reconstruction company are limited to the actual Valuation Service (BVAL) price or as per FIMMDA realization of the financial assets assigned to the guided valuation methodology for unquoted bonds instruments in the concerned scheme, The Group in the chronological order based on availability. reckons the net asset value obtained from the asset reconstruction company from time to time, Special bonds such as oil bonds, fertilizer bonds, for valuation of such investments at each reporting UDAY bonds etc. which are directly issued by date. In case of investment in Security Receipts on Government of India (‘GOI’) is valued based on or after April 1, 2017 which are backed by more FBIL valuation. than 50% of the stressed assets sold by the bank, provision for depreciation in value is made at higher Non-performing investments are identified and of – provisioning rate required in terms of net assets depreciation/provision are made thereon based value declared by Reconstruction Company (RC)/ on the RBI guidelines. Based on management Securitization Company (SC) or the provisioning assessment of impairment, The Group additionally rate as per the extant asset classification and creates provision over and above the RBI guidelines. provisioning norms as applicable to the underlying The depreciation/provision on such non-performing loans, assuming that the loan notionally continue investments are not set off against the appreciation in the books of the Bank. All other investments in in respect of other performing securities. Interest on the Security Receipts are valued as per the NAV non-performing investments is not recognized in the obtained from issuing RC / SC. Profit and Loss account until received.

Investments in quoted Mutual Fund (MF) Units are e) Profit/Loss on sale of Investments valued at the latest repurchase price/net asset Profit/Loss on sale of Investments in the HTM value declared by the mutual fund. Investments in category is recognized in the profit and loss account un-quoted MF Units are valued on the basis of the and profit thereafter is appropriated (net of applicable latest re-purchase price declared by the MF in respect taxes and statutory reserve requirements) to Capital of each particular Scheme. Reserve. Profit/Loss on sale of investments in HFT and AFS categories is recognized in the Profit Investment in listed instruments of Real Estate and Loss account. Investment Trust (REIT)/Infrastructure Investment Trust (INVIT) is valued at closing price on a recognized f) Accounting for repos/reverse repos stock exchange with the higher volumes. In case the instruments were not traded on any stock exchange Securities sold under agreements to repurchase within 15 days prior to date of valuation, valuation is (Repos) and securities purchased under agreements done based on the latest NAV (not older than 1 year) to resell (Reverse Repos) including liquidity submitted by the valuer. adjustment facility (LAF) with RBI are treated as collateralized borrowing and lending transactions Sovereign foreign currency bonds are valued using respectively in accordance with RBI master circular Composite Bloomberg Bond Trader (CBBT) price No. DBR.No.BP.BC.6/21.04.141/2015-16 dated or Bloomberg Valuation Service (BVAL) price or on July 1, 2015. The first leg of the repo transaction Treasury curve in the chronological order based is contracted at the prevailing market rates. on availability. The difference between consideration amounts of first and second (reversal of first) leg reflects interest

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and is recognized as interest income/expense over exposure of the banking system to a specified borrower the period of transaction. beyond Normally Permitted Lending Limit (NPLL) in proportion to bank’s funded exposure to specified Group also undertakes Repo and Reverse repo borrower. Such provisions are included in Schedule 5 – transactions from IFSC Banking Unit in GIFT ‘Other liabilities & provisions – Others’. City in Foreign currency Sovereign Securities and accounting is similar to the domestic In respect of restructured standard and non-performing repo transactions. advances, provision is made for the present value of principal and interest component sacrificed at the time of g) Investment fluctuation reserve restructuring the assets, based on the RBI guidelines. With a view to building up of adequate reserves Accounts are written-off in accordance with the Bank’s to protect against increase in yields, RBI through policies. Recoveries from bad debts written-off are circular number RBI/2017-18/147 DBR.No.BP. recognized in the Profit and Loss account and included BC.102/21.04.048/2017-18 dated April 2, 2018, under other income. advised all banks to create an IFR with effect from the FY 2018-19. In case of loans sold to asset reconstruction company if consideration is more than net book value, The Group The amount transferred to IFR will be lower of records the security receipts as investment at Net Book the following (i) net profit on sale of investments Value as per RBI guidelines. during the year or (ii) net profit for the year less mandatory appropriations, until the amount of IFR is The Group has in place a Country Risk management at least 2 percent of the HFT and AFS portfolio, on a policy as part of its Board approved Credit policy, which continuing basis. is based on extant regulatory guidelines and addresses the identification, measurement, monitoring and reporting 18.5.3 Advances of country risk. Countries are categorized into seven risk Accounting and classification categories, viz. Insignificant, Low Risk, Moderately Low Risk, Moderate Risk, Moderately Risk, High Risk and Very Advances are classified as performing and non-performing High Risk. The Group calculates direct and indirect country based on the relevant RBI guidelines. Advances are stated risk in line with the policy requirements. Indirect exposure net of specific provisions, interest in suspense, inter-bank is reckoned at 50% of the exposure in case of countries participation certificates issued and bills rediscounted. where the net funded exposure exceeds 1% of the Bank’s total assets. Further, if the net funded exposure of The Provisioning Group in respect of each country exceeds 1% of the Provisions in respect of non-performing advances are Bank’s total assets, provisioning is required to be made made based on management’s assessment of the on exposure to such countries. Depending on the risk degree of impairment of the advances, subject to the category of the country, provisioning is done on a graded minimum provisioning level prescribed in relevant scale ranging from 0.25% to 100% for exposures with RBI guidelines. The specific provision levels for retail contractual maturity greater than or equal to 180 days. non-performing assets are also based on the nature of In respect of short-term exposures with contractual product and delinquency levels. Specific provisions in maturity less than 180 days, 25% of the normal provision respect of non-performing advances are charged to the requirement is held. Profit and Loss account and included under Provisions and Contingencies. 18.5.4 Transactions involving foreign exchange As per the RBI guidelines a general provision is made on Foreign currency income and expenditure items of all standard advances, including provision for borrowers domestic operations are translated at the exchange having unhedged foreign currency exposure and for rates prevailing on the date of the transaction. credit exposures computed as per the current marked Income and expenditure items of integral foreign to market values of interest rate and foreign exchange operations (representative offices) are translated at derivative contracts. These also include provision for the daily average closing rates and of non-integral stressed sector exposures and provision for incremental

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foreign operations (foreign branches) at the monthly 18.5.5 Earnings per share average closing rates. The Group reports basic and diluted earnings per equity share in accordance with Accounting Standard (AS) 20, Premia/discounts on foreign exchange swaps, that are “Earnings per Share” notified under Section 133 of the used to hedge risks arising from foreign currency assets Companies Act, 2013. Basic earnings per equity share and liabilities, are amortized over the life of the swap. have been computed by dividing net profit after tax for the year by the weighted average number of equity Monetary foreign currency assets and liabilities are shares outstanding for the period. translated at the balance sheet date at rates notified by the Foreign Exchange Dealers’ Association of India Diluted earnings per equity share have been computed (‘FEDAI’). Foreign exchange contracts are stated at using the weighted average number of equity shares and net present value using LIBOR/SWAP curves of the dilutive potential equity shares options outstanding during respective currencies with the resulting unrealized gain or the period except where the results are anti dilutive. loss being recognized in the Profit and Loss Account and correspondingly in other assets (representing positive 18.5.6 Accounting for derivative transactions Mark-to-Market) and in other liabilities (representing negative Mark-to-Market (MTM)) on a gross basis. Derivative transactions comprises forward rate agreements, swaps and option contracts. The Group In accordance with AS 11 ‘The Effects of changes in undertakes derivative transactions for market making/ Foreign Exchange Rates’, contingent liabilities in respect trading and hedging on-balance sheet assets and of outstanding foreign exchange forward contracts, liabilities. All market making/trading transactions are derivatives, guarantees, endorsements and other marked to market on a monthly basis and the resultant obligations are stated at the exchange rates notified by unrealized gains/losses are recognized in the profit FEDAI corresponding to the balance sheet date. and loss account.

Both monetary and non-monetary foreign currency Derivative transactions that are undertaken for hedging assets and liabilities of non-integral foreign operations are accounted for on accrual basis except for the are translated at closing exchange rates notified by FEDAI transaction designated with an asset or liability that is at the Balance Sheet date and the resulting profit/loss carried at market value or lower of cost or market value arising from exchange differences are accumulated in the in the financial statements, which are accounted similar to Foreign Currency Translation Account until the disposal of the underlying asset or liability. the net investment in the non-integral foreign operations. Cross currency interest rate swaps which are used by In accordance with the RBI clarification, The Group The Group to hedge its foreign currency borrowings have does not recognise in the profit and loss account the been designated as cash flow hedges and are measured proportionate exchange gains or losses held in the foreign at fair value. The corresponding gain or loss is recognized currency translation reserve on repatriation of profits from as cash flow hedge reserve. Further to match profit/loss overseas operations. on account of revaluation of foreign currency borrowing, the corresponding amount is recycled from cash flow Currency future contracts are marked to market daily using hedge reserve to Profit and Loss account. settlement price on a trading day, which is the closing price of the respective future contracts on that day. While the daily The Group follows the option premium accounting settlement prices is computed on the basis of weighted framework prescribed by FEDAI SPL – circular dated average price of such contract, the final settlement price December 14, 2007. Premium on option transaction is taken as the RBI reference rate on the last trading day of is recognized as income/expense on expiry or early the future contract or as may be specified by the relevant termination of the transaction. Mark-to-market (MTM) authority from time to time. All open positions are marked gain/loss (adjusted for premium received/paid on option to market based on the settlement price and the resultant contracts) is recorded under ‘Other Income’. marked to market profit/loss is daily set. The amounts received/paid on cancellation of option contracts are recognized as realized gains/losses on options. Charges receivable/payable on cancellation/

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Schedules forming a part of Consolidated Financial Statements termination of foreign exchange forward contracts and As per the RBI guidelines on ‘Prudential Norms for swaps are recognized as income/expense on the date of Off-balance Sheet Exposures of Banks’ a general cancellation/ termination under ‘Other Income’. provision is made on the current gross MTM gain of the contract for all outstanding interest rate and foreign Valuation of Interest Rate Futures (IRF) is carried out on exchange derivative transactions. the basis of the daily settlement price of each contract provided by the exchange. 18.5.7 Fixed assets Fixed assets are stated at cost less accumulated The requirement for collateral and credit risk mitigation depreciation, amortization and accumulated impairment on derivative contracts is assessed based on internal losses. Cost comprises the purchase price and any cost credit policy. Overdues if any, on account of derivative attributable for bringing the asset to its working condition transactions are accounted in accordance with extant for its intended use. Subsequent expenditure incurred on RBI guidelines. assets put to use is capitalised only when it increases the future benefit /functioning capability from/of such assets.

18.5.8 Depreciation Depreciation on fixed assets is provided on straight-line method, over estimated useful lives, as determined by the management, at the rates mentioned below-

Useful life of Assets as per Useful life of Assets as per Class of asset Companies Act, 2013 Bank’s Accounting Policy Owned Premises 60 years 60 years Office equipment 5 years 5 years Computer hardware1 6 years 3 years Computer software* 6 years 4 years Vehicles1 8 years 5 years Furniture and Fixtures 10 years 10 years Automated Teller Machines (‘ATMs’)1 15 years 10 years Leasehold improvements to premises - Over the lease period or 9 years whichever is less. * As per RBI Guidelines. 1 Based on technical evaluation, the management believes that the useful lives as given above best represent the period over which management expects to use these assets. Hence, the useful lives for these assets is different from the useful lives as prescribed under Part C of Schedule II of the Companies Act, 2013.

▲▲ Assets costing up to `5,000 are fully depreciated in amount is charged over the revised remaining useful the year of purchase. life of the said asset. ▲▲ For assets purchased/sold during the year, ▲▲ The useful life of assets is based on historical depreciation is being provided on pro rata basis by experience of the Bank, which is different from the Bank. the useful life as prescribed in Schedule II to the Companies Act, 2013. ▲▲ Improvements to leasehold assets are depreciated over the remaining period of lease. 18.5.9 Impairment of assets ▲▲ Reimbursement, if any, is recognized on receipt Assets are reviewed for impairment whenever events and is adjusted to the book value of asset and or changes in circumstances indicate that the carrying depreciated over the balance life of the asset. amount of an asset may not be recoverable. An asset’s recoverable amount is the higher of an asset’s net selling ▲▲ Whenever there is a revision in the estimated useful price and its value in use. If such assets are considered to life of the asset, the unamortized depreciable be impaired, the impairment is recognized by debiting the

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profit and loss account and is measured as the amount The defined gratuity benefit plans are valued by an by which the carrying amount of the assets exceeds the independent actuary as at the Balance Sheet date using recoverable amount of the assets. the projected unit credit method as per the requirement of AS-15, Employee Benefits, to determine the present value 18.5.10 Employee benefits of the defined benefit obligation and the related service costs. Under this method, the determination is based on Employee Stock Option Scheme (‘ESOS’) actuarial calculations, which include assumptions about The Employee Stock Option Scheme (‘the Scheme’) demographics, early retirement, salary increases and provides for the grant of options to acquire equity shares interest rates. Actuarial gain or loss is recognized in the of The Group to its employees. The options granted to Profit and Loss account. employees vest in a graded manner and these may be exercised by the employees within specified periods. Provident fund In accordance with law, all employees of The Group are Measurement of the employee share-based payment entitled to receive benefits under the provident fund, a plans is done in accordance with the Guidance Note on defined contribution plan in which both the employee and Accounting for Employee Share-based Payments issued The Group contribute monthly at a pre determined rate. by Institute of Chartered Accountants of India (ICAI) and Contribution to provident fund are recognized as expense SEBI (Share Based Employee Benefits) Regulations, as and when the services are rendered The Group has no 2014. The Group measures compensation cost relating to liability for future provident fund benefits other than its employee stock options using the intrinsic value method. annual contribution. Compensation cost is measured by the excess, if any, of the fair market price of the underlying stock (i.e. the last In February 2019, the honorable Supreme Court of India closing price on the stock exchange on the day preceding in its judgment clarified that certain special allowances the date of grant of stock options) over the exercise price. should be considered to measure obligations under The exercise price of the Bank’s stock option is the last Employees' Provident Funds and Miscellaneous closing price on the stock exchange on the day preceding Provisions Act, 1952 (the PF Act). The Group has been the date of grant of stock options and accordingly there legally advised that there are interpretative challenges on is no compensation cost under the intrinsic value method. the application of judgment retrospectively and as such does not consider there is any probable obligations for Compensated Absence past periods. Due to imperative challenges, the Bank has The employees of The Group are entitled to carry not disclosed contingent liability amount for past liability. forward a part of their unavailed/unutilized leave subject to a maximum limit. The employees cannot encash National Pension System (NPS) unavailed/unutilized leave. The Group provides for The NPS is a defined contribution retirement plan. leave encashment/compensated absences based on an The primary objective is enabling systematic savings and independent actuarial valuation at the Balance Sheet to provide retirees with an option to achieve financial date, which includes assumptions about demographics, stability. Pension contributions are invested in the pension early retirement, salary increases, interest rates and fund schemes. The Group has no liability for future fund leave utilization. benefits other than the voluntary contribution made by employees who agree to contribute to the scheme. Gratuity The Group provides for gratuity, a defined benefit 18.5.11 Leases retirement plan, covering eligible employees. The plan Leases where the lessor effectively retains substantially all provides for lump sum payments to vested employees risks and benefits of ownership are classified as operating at retirement or upon death while in employment or on leases. Operating lease payments are recognized as an termination of employment for an amount equivalent to expense in the profit and loss account on a straight-line 15 days’ eligible salary payable for each completed year basis over the lease term in accordance with Accounting of service if the service is more than 5 years. The Group Standard -19, Leases. accounts for the liability for future gratuity benefits using the projected unit cost method based on annual actuarial valuation.

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18.5.12 Income taxes Contingent assets are not recognized in the financial statements. However, contingent assets are assessed Tax expense comprises current and deferred tax. continually and if it is virtually certain that an inflow of Current tax comprises of the amount of tax for the period economic benefits will arise, the asset and related income determined in accordance with the Income Tax Act, 1961 are recognized in the period in which the change occurs. and the rules framed there under. Deferred income taxes reflects the impact of current year timing differences 18.5.14 Cash and Cash equivalent between taxable income and accounting income for the year and reversal of timing differences of earlier years. Cash and cash equivalents include cash in hand, balances Deferred tax assets and liabilities are recognized for the with RBI, balances with other banks and money at call future tax consequences of timing differences between and short notice. the carrying values of assets and liabilities and their respective tax bases, and operating loss carry forwards. 18.5.15 Corporate social responsibility Deferred tax assets and liabilities are measured using Expenditure towards corporate social responsibility, in the enacted or substantively enacted tax rates at the accordance with Companies Act, 2013, are recognized in balance sheet date. the Profit and Loss account. Deferred tax assets are recognized only to the extent 18.5.16 Debit and credit cards reward points there is reasonable certainty that the assets can be realized in future. In case of unabsorbed depreciation The Group estimates the probable redemption of debit or carried forward loss under taxation laws, all deferred and credit card reward points and cost per point using tax assets are recognized only if there is virtual certainty actuarial valuation method by employing an independent of realization of such assets supported by convincing actuary, which includes assumptions such as mortality, evidence. Deferred tax assets are reviewed at each redemption and spends. balance sheet date and appropriately adjusted to reflect the amount that is reasonably/virtually certain Provisions for liabilities on said reward points are made to be realized. based on the actuarial valuation report as furnished by the said independent actuary and included in other liabilities. 18.5.13 Provisions and contingent assets/ liabilities 18.5.17 Bullion A contingent liability is a possible obligation that arises The Group imports bullion including precious metal from past events whose existence will be confirmed by the bars on a consignment basis for selling to its customers. occurrence or non-occurrence of one or more uncertain The imports are typically on a back-to-back basis and future events not wholly within the control of The Group are priced to the customer based on a price quoted or a present obligation that arises from past events that is by the supplier. The Group earns a fee on such bullion not recognized because it is not probable that an outflow transactions. The fee is classified in other income. of resources will be required to settle the obligation or a The Group also deals in bullion on a borrowing and reliable estimate of the amount of the obligation cannot be lending basis and the interest paid/ received thereon is made. The Group does not recognize a contingent liability classified as interest expense/ income respectively. but discloses its existence in the financial statements 18.5.18 Share issue expenses In accordance with AS 29, Provisions, Contingent Share issue expenses are adjusted from Share Liabilities and Contingent Assets, The Group creates a Premium Account in terms of Section 52 of the provision when there is a present obligation as a result Companies Act, 2013. of a past event that probably requires an outflow of resources and a reliable estimate can be made of the 18.5.19 Segment information amount of the obligation. The disclosure relating to segment information is in Provisions are reviewed at each balance sheet date and accordance with AS-17, Segment Reporting and as per adjusted to reflect the current best estimate. If it is no guidelines issued by RBI. longer probable that an outflow of resources would be required to settle the obligation, the provision is reversed.

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18.5.20 Priority Sector Lending Certificates priority sector portfolio by selling or buying PSLC. There is (PSLC) no transfer of risks or loan assets in these transactions. The fee paid for purchase of the PSLC is treated as an The Group, in accordance with RBI circular FIDD.CO.Plan. ‘Expense’ and the fee received from the sale of PSLCs is BC.23/ 04.09.01/2015-16 dated April 7, 2016, trades in treated as ‘Other Income’.

18.6 Capital 18.6.1 Equity Issue During the financial year ended March 31, 2019, The Group has issued 12,065,794 shares pursuant to the exercise of stock option aggregating to `953.47 million (previous year: `1,378.65 million)

Movement in Share Capital (` in million) As at As at Share Capital March 31, 2019 March 31, 2018 Opening Share Capital 4,605.93 4,564.86 Addition due to exercise of Stock Option 24.13 41.07 Addition due to shares issued to QIP – – Closing Share Capital 4,630.07 4,605.93

18.6.2 Proposed Dividend be `5,582.01 million, including dividend tax (previous year: `7,503.64 million). The actual dividend payout may The Board of Directors of the bank has recommended however change due to equity shares options exercised a dividend of `2 per equity share for approval by by employees between the end of the financial year and shareholders at the 15th Annual General Meeting. the dividend declaration date. If approved, the total liability arising to The Group would

18.7 Income Taxes Provisions made for Income Tax during the year (` in million) For the year ended For the year ended Particulars March 31, 2019 March 31, 2018 Current income tax expense 23,009.69 22,439.16 Deferred income tax credit (16,612.30) (2,726.00) TOTAL 6,397.39 19,713.16

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18.8 Staff retirement benefits The following table sets out the funded status of the Gratuity Plan and the amounts recognized in the Group’s financial statements as of March 31, 2019 and March 31, 2018: a) Changes in present value of Obligations (` in million) As at As at Particulars March 31, 2019 March 31, 2018 Present Value of Obligation at the beginning of the year 1,155.37 902.92 Interest Cost 87.56 61.85 Current Service Cost 279.03 262.64 Past Service Cost - 0.41 Benefits Paid (83.96) (108.47) Actuarial (gain)/loss on Obligation 26.07 36.01 Present Value of Obligation at the end of the year 1,464.09 1,155.37

Changes in the fair value of plan assets: (` in million) For the year ended For the year ended Particulars March 31, 2019 March 31, 2018 Fair value of plan assets at the beginning of the year 1,155.29 885.95 Adjustment to Opening Balance - 4.25 Expected return on plan assets 80.78 61.93 Contributions - 321.34 Benefits paid (83.96) (108.47) Actuarial gain/(loss) on plan assets (26.51) (9.71) Fair value of plan assets at the end of the period 1,125.60 1,155.29

The Bank has entire contribution of Gratuity Fund as Investments with Insurance Companies.

The overall expected rate of return on assets is determined based on the market prices prevailing on that date, applicable to the period over which the obligation is to be settled.

Net gratuity cost for the year ended March 31, 2019 and March 31, 2018 comprises the following components: (` in million) For the year ended For the year ended Particulars March 31, 2019 March 31, 2018 Current Service Cost 279.03 262.64 Interest Cost 87.55 61.85 Expected Return on plan assets (80.78) (61.93) Net Actuarial gain recognized in the year 52.59 45.72 Past Service Cost 0.09 0.41 Expenses recognized 338.48 307.14

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Experience History:

(` in million) For the For the For the For the For the year ended year ended year ended year ended year ended March 31, 2019 March 31, 2018 March 31, 2017 March 31, 2016 March 31, 2015 (Gain)/Loss on obligation due to 57.48 (70.88) 48.37 15.18 33.86 change in assumption Experience (Gain)/Loss on obligation (31.99) 113.80 32.76 (5.99) (51.26) Actuarial Gain/(Loss) on plan assets (26.51) (5.21) 8.46 (18.68) (2.49)

The assumptions used in accounting for the gratuity plan are set out below: (` in million) For the year ended For the year ended Particulars March 31, 2019 March 31, 2018 Discount Rate 7.05%~7.55% 7.4%~7.60% Expected Return on Plan Assets 7.00% 7.00%~8.00% Mortality IALM (2006-08) Ult IALM (2006-08) Ult Future Salary Increases 10%~12.00% 12.00% Disability - - Attrition 8%-27% 6%-25% Retirement 60 yrs 60 yrs

Actuarial assumption on salary increase also takes into consideration the inflation, seniority, promotion and other relevant factors. Position of plan asset/liability (` in million) For the year ended For the year ended Particulars March 31, 2019 March 31, 2018 Fair value of plan assets at the end of the period 1,125.60 1,155.29 Present Value of Obligation at the end of the year 1,464.09 1,155.38 Plan asset/(liability) (338.49) (0.09)

The Group is yet to determine future contribution to Gratuity fund for Financial Year 2019-20.

National Pension Scheme The Bank has contributed `20.82 million for the year ended March 31, 2019 (March 31, 2018: `15.22 million) to NPS for employees who had opted for the scheme. The Bank has no liability for future fund benefits other than its annual contribution for the employees who agree to contribute to the scheme.

Provident Fund (PF) The Bank has recognised in the profit and loss account `823.71 million for the year ended March 31, 2019 (March 31, 2018: `730.44 million) towards contribution to the provident fund.

Compensated absence The Bank has recognised `174.07 million in the profit and loss account for the year ended March 31, 2019 (March 31, 2018: `53.85 million) towards compensated absences.

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18.9 Segment Results Pursuant to the guidelines issued by RBI on AS-17 (Segment Reporting) – Enhancement of Disclosures dated April 18, 2007, effective from period ending March 31, 2008, the following business segments have been reported.

▲▲ Treasury: Includes investments, all financial markets activities undertaken on behalf of the Bank's customers, Proprietary trading, maintenance of reserve requirements and resource mobilisation from other banks and financial institutions. ▲▲ Corporate/Wholesale Banking: Includes lending, deposit taking and other services offered to corporate customers. ▲▲ Retail Banking: Includes lending, deposit taking and other services offered to retail customers. ▲▲ Other Banking Operations: Includes para banking activities like third party product distribution, merchant banking etc. Segmental results for the year ended March 31, 2019 are set out below: (` in million) Corporate/ Other Banking Business Segments Treasury Wholesale Retail Banking Total Operations Banking Segment Revenue 104,539.78 222,612.45 45,658.71 2,936.72 375,747.65 Less: Inter-segment (32,759.28) Revenue net of inter-segment 342,988.37 Result 35,460.35 14,183.39 (4,524.82) 884.69 46,003.61 Unallocated Expenses (22,513.56) Operating Profit 23,490.05 Income Taxes 6,397.39 Extraordinary Profit/(Loss) - Net Profit 17,092.66 Other Information: Segment assets 1,302,564.99 1,979,830.69 486,554.09 2,939.84 3,771,889.61 Unallocated assets 36,706.48 Total assets 3,808,596.10 Segment liabilities 1,081,751.87 1,411,265.34 947,394.05 2,112.79 3,442,524.05 Unallocated liabilities 366,072.04 Total liabilities 3,808,596.10

Other banking operations includes income from bancassurance business `868.16 million during year ended March 31, 2019.

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Segmental results for the year ended March 31, 2018 are set out below: (` in million) Corporate/ Other Banking Business Segments Treasury Wholesale Retail Banking Total Operations Banking Segment Revenue 65,927.05 166,354.92 29,728.16 2,662.90 264,673.03 Less: Inter-segment (9,044.10) Revenue net of inter-segment 255,628.93 Result 29,460.99 54,753.48 (5,907.63) 1,223.37 79,530.21 Unallocated Expenses (17,484.85) Operating Profit 62,045.36 Income Taxes 19,713.16 Extraordinary Profit/(Loss) - Net Profit 42,332.20 Other Information: Segment assets 1,022,128.60 1,714,497.01 371,370.33 1,411.15 3,109,407.09 Unallocated assets 15,089.45 Total assets 3,124,496.54 Segment liabilities 751,075.32 1,261,035.68 750,850.50 5,311.04 2,768,272.54 Unallocated liabilities 356,224.00 Total liabilities 3,124,496.54

Other banking operations includes income from bancassurance business `767.80 million during year ended March 31, 2018.

Notes for segment reporting: 1. The business of the Bank is concentrated largely in India. Accordingly, geographical segment results have not been reported in accordance with AS-17 (Segment Reporting).

2. In computing the above information, certain estimates and assumptions have been made by the Management and have been relied upon by the auditors.

3. Income, expense, assets and liabilities have been either specifically identified with individual segment or allocated to segments on a systematic basis or classified as unallocated.

4. The unallocated assets Includes tax paid in advance/tax deducted at source and deferred tax asset.

5. The unallocated liabilities include Share Capital, Reserves & Surplus and Tier I bond borrowings.

6. Inter-segment transactions have been generally based on transfer pricing measures as determined by the Management.

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18.10 Related Party Disclosures The Group has transactions with its related parties comprising of subsidiary, key management personnel and the relative of key management personnel

As per AS 18 “Related Party Disclosures”, notified under Section 133 of the Companies Act, 2013, read together with paragraph 7 of the Companies (Accounts) Rules 2014, the Bank’s related parties for the year ended March 31, 2019 are disclosed below:

Individuals having significant influence: ▲▲ Mr. Rana Kapoor, Managing Director & CEO (from April 1, 2018 to January 31, 2019) ▲▲ Mr. Ajai Kumar, Managing Director & CEO (from February 1, 2019 to February 28, 2019) ▲▲ Mr. Ravneet Gill, Managing Director & CEO (from March 1, 2019 to March 31, 2019)

Key Management Personnel (‘KMP’) (Whole-time Director) ▲▲ Mr. Rana Kapoor, Managing Director & CEO (from April 1, 2018 to January 31, 2019) ▲▲ Mr. Ajai Kumar, Managing Director & CEO (from February 1, 2019 to February 28, 2019) ▲▲ Mr. Ravneet Gill, Managing Director & CEO (from March 1, 2019 to March 31, 2019)

Enterprise where relative of whole time director having significant influence ▲▲ BW Businessworld Media Private Limited and Apex Club India Private Limited

The following represents the significant transactions between the Bank and such related parties including relatives of above-mentioned KMP during the year ended March 31, 2019: (` in million) Relatives of Enterprise Whole-time Whole-time where relative directors / Maximum Maximum Items/Related Party directors/ of whole time individual having Balance during Balance during Category individual having director having significant the year the year significant significant influence influence influence Deposits 3.06* 15.62 Interest paid 0.52 Receiving of services 5.46 Dividend paid 270.00

* Represents outstanding as of March 31, 2019.

Annual Report 2018-19 295 Schedules forming a part of Consolidated Financial Statements

During the year ended March 31, 2019, the Bank has contributed `537.86 million (previous year `452.13 million) to YES Foundation. YES Foundation is an independent public charitable trust which undertakes social charitable activities. YES Foundation does not qualify as Related Party, as defined under the Accounting Standard 18 - Related Party Disclosure and RBI guidelines

The following represents the significant transactions between the Bank and such related parties including relatives of above-mentioned KMP during the year ended March 31, 2018: (` in million) Relatives of Enterprise Whole-time Whole-time where relative directors / Maximum Maximum Items/Related Party directors/ of whole time individual having Balance during Balance during Category individual having director having significant the year the year significant significant influence influence influence Deposits # # # # Interest paid # # Receiving of services # 6.02 Dividend paid #

# In Financial Year 2017-18 there was only one related party in the said category, hence the Bank has not disclosed the details of transactions in accordance with circular issued by the RBI on March 29, 2003 “Guidance on compliance with the accounting standards by banks”.

18.11 Operating Leases Lease payments recognized in the profit and loss account for the year ended March 31, 2019 was `3,651.58 million (Previous year: `4,067.79 million). During the year ended March 31, 2019, the Group had paid minimum lease payment `3,661.08 million (Previous year: `3,723.92 million). The following table sets forth, for the period indicated, the details of future rental payments on operating leases. (` in million) As at As at Lease obligations March 31, 2019 March 31, 2018 Not later than one year 3,501.92 3,711.47 Later than one year and not later than five years 9,817.78 14,691.30 Later than five years 12,418.84 16,627.33 TOTAL 25,738.54 35,030.10

The Group does not have any provisions relating to contingent rent.

The terms of renewal/purchase options and escalation clauses are those normally prevalent in similar agreements. There are no undue restrictions or onerous clauses in the agreements.

296 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

Schedules forming a part of Consolidated Financial Statements

18.12 Earnings Per Share (‘EPS’) The Bank reports basic and diluted earnings per equity share in accordance with Accounting Standard (AS) 20, “Earnings Per Share”. The dilutive impact is mainly due to stock options granted to employees by the Bank. The computation of earnings per share is given below: (` in million) Year ended Year ended March 31, 2019 March 31, 2018 Basic (annualized) Weighted average no. of equity shares outstanding 2,309,296,728 2,292,768,279 Net profit/(loss) `( ) 17,092.66 42,332.20 Basic earnings per share (`) 7.40 18.46 Diluted (annualized) Weighted average no. of equity shares outstanding 2,331,418,688 2,339,752,831 Net profit/(loss) `( ) 17,092.66 42,332.20 Diluted earnings per share (`) 7.33 18.09 Nominal value per share (`) 2 2

The difference between weighted average number of ▲▲ YBL JESOP V/ PESOP II (Consisting of three sub equity shares outstanding between basic and diluted schemes JESOP V/ PESOP II/ PESOP II -2010). in the above mentioned disclosure is on account of ▲▲ YBL Employee Stock Option Scheme, 2018 (YBL outstanding ESOPs. ESOS 2018) [Consisting of YBL Joining Employee Stock Option Plan, 2018 (JESOP 2018); YBL Basic earnings per equity share has been computed by Performance Employee Stock Option Plan, 2018 dividing net profit for the year attributable to the equity (PESOP 2018); and YBL MD&CEO (New) Stock shareholders by the weighted average number of equity Option Plan, 2019 (MD&CEO Plan 2019)] shares outstanding for the year. Diluted earnings per equity share has been computed by dividing the net Effective from June 13, 2018, all new options have been profit for the year attributable to the equity shareholders granted under the YBL ESOS 2018 (which inter-alia by the weighted average number of equity shares and consists of JESOP 2018, PESOP 2018 and MD & CEO dilutive potential equity shares options outstanding Plan 2019). The YBL ESOS 2018 and plans formulated during the year, except where the results are anti-dilutive. thereunder are in compliance with the SEBI (Share Based The dilutive impact is on account of stock options granted Employees Benefits) Regulations, 2014 as amended to employees by the Bank. There is no impact of dilution from time to time. Source of shares are primary in nature, on the profits in the current year and previous year. since the Bank has been issuing new equity shares upon exercise of options. 18.13 ESOP Disclosures JESOP II and JESOP III were in force for employees Statutory Disclosures Regarding Joining joining the Bank up to March 31, 2006 and March 31, Stock Option Scheme: 2007 respectively. Grants under PESOP II had been discontinued w.e.f. January 20, 2010. Grants under The Bank has Five Employee Stock Option Schemes viz. JESOP IV/PESOP I and JESOP V/ PESOP II -2010 had been discontinued w.e.f. June 12, 2018 pursuant to ▲▲ Joining Employee Stock Option Plan II (JESOP II), coming into effect of YBL ESOS 2018. However, any ▲▲ Joining Employee Stock Option Plan III (JESOP III), options already granted under the abovementioned plans would be valid in accordance with the terms & conditions ▲▲ YBL ESOP (consisting of two sub schemes JESOP mentioned in the plans. IV / PESOP I)

Annual Report 2018-19 297 Schedules forming a part of Consolidated Financial Statements

In accordance with the various Employee Stock Option Plans/Schemes of the Bank as mentioned above, the Employees can exercise the options granted to them from time to time:

JESOP/PESOP ESOP Scheme Exercise period JESOP JESOP II 50% after 3 years and balance after 5 years from the Grant date JESOP III 50% after 3 years and balance after 5 years from the Grant date JESOP IV 50% after 3 years and balance after 5 years from the Grant date JESOP V 50% after 3 years and balance after 5 years from the Grant date MD&CEO Plan 2019 20%, 30% & 50% each year, from end of 1st year from the Grant date PESOP PESOP I 25% after each year from the Grant date PESOP II 30%, 30% & 40% after each year from the Grant date PESOP II - 2010 30%, 30% & 40% each year, from end of 3rd year from the Grant date JESOP 2018 50% after 3 years and balance after 5 years from the Grant date PESOP 2018 30%, 30% & 40% each year, from end of 3rd year from the Grant date Options under all the aforesaid plans are granted for a term of 10 years (inclusive of the vesting period) and are settled with equity shares being allotted to the beneficiary upon exercise.

A summary of the status of the Bank’s stock option plans as on March 31, 2019 and March 31, 2018 is set out below:

As at March 31, 2019 As at March 31, 2018 PESOP JESOP PESOP JESOP Options outstanding at the beginning of the year 46,257,335 15,963,100 64,802,165 20,614,950 Granted during the year 365,000 5,940,000 3,847,500 1,697,500 Exercised during the year 9,265,020 2,800,774 15,590,830 4,947,350 Forfeited/lapsed during the year 2,338,200 847,500 6,801,500 1,402,000 Options outstanding at the end of the year 35,019,115 18,254,826 46,257,335 15,963,100 Options exercisable 18,701,265 3,901,451 18,413,585 2,277,350 Weighted average exercise price (`) 70.84 106.08 64.76 74.59 Weighted average remaining contractual life of 1.50 1.86 1.78 1.82 outstanding option (yrs)

The group has charged Nil amount, being the intrinsic value of the stock options granted for the year ended March 31, 2019 and March 31, 2018. Had the Bank adopted the Fair Value method (based on Black-Scholes pricing model), for pricing and accounting of options, net profit after tax would have been lower by `375.18 millions (Previous year: `414.98 millions), the basic earnings per share would have been `7.24 (Previous year: `18.28) per share instead of `7.40 (Previous year: `18.46) per share; and diluted earnings per share would have been `7.17 (Previous year: ` 17.92) per share instead of `7.33 (Previous year: `18.09) per share.

298 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

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The following assumptions have been made for computation of the fair value of ESOP granted for the year ended March 31, 2019 and March 31, 2018.

For the year ended For the year ended March 31, 2019 March 31, 2018 Risk free interest rate 6.29% – 9.23% 6.29% – 9.23% Expected life 1.5 yrs – 7.5 yrs 1.5 yrs – 7.5 yrs Expected volatility 25.01% – 48.72% 25.01% – 48.72% Expected dividends 1.20% 1.20% In computing the above information, certain estimates and assumptions have been made by the Management.

18.14 Deferred Taxation The deferred tax asset of million `25,374.71 as at March 31, 2019 and `8,762.42 million as at March 31, 2018, is included under other assets and the corresponding credits have been taken to the profit and loss account.

The components that give rise to the deferred tax asset included in the balance sheet are as follows: (` in million) As at As at Particulars March 31, 2019 March 31, 2018 Deferred tax asset Depreciation 597.38 418.59 Provision for gratuity and unutilized leave 395.53 213.48 Provision for Non-performing Assets 9,779.42 2,930.53 Amortization of premium on HTM securities 1,035.72 1,025.76 Provision for standard advances 11,119.17 3,220.59 Other Provisions 2,447.48 953.47 Deferred tax asset 25,374.70 8,762.42

18.15 Provisions and Contingencies The breakup of provisions of the Bank for the year ended March 31, 2019 and March 31, 2018 are given below: (` in million) For the year ended For the year ended Particulars March 31, 2019 March 31, 2018 Provision for taxation 6,397.39 19,713.16 Provision for investments 6,824.89 2,599.44 Provision for standard advances 22,514.06 1,687.43 Provision made/write-off for non-performing advances 25,669.54 10,792.64 Others Provisions* 2,767.12 462.88 TOTAL 64,172.99 35,255.55

* Other Provisions includes provision made against other assets.

Annual Report 2018-19 299 Schedules forming a part of Consolidated Financial Statements

18.16 Dues to Micro and Small 18.19 Disclosure on Complaints Enterprises The Bank became aware in September 2018 through Under the Micro, Small and Medium Enterprises communications from stock exchanges of an anonymous Development Act, 2006 which came into force from whistleblower complaint alleging irregularities in the October 2, 2006, certain disclosures are required to be Bank’s operations, potential conflicts of interests in made relating to Micro, Small and Medium enterprises. relation to the former MD and CEO and allegations of There have been `437.40 million worth bills which incorrect NPA classification. The Bank conducted an were paid with delays to micro and small enterprises. internal enquiry of these allegations, which was carried There have no demand of interest on these payments. out by management and supervised by the Board of The above is based on the information available with the Directors. The enquiry resulted in a report that was Bank which has been relied upon by the auditors. reviewed by the Board in November 2018. Based on further inputs and deliberations in December 2018, the 18.17 Provision for Long-Term contracts Audit Committee of the Bank engaged an external firm to independently examine the matter. The Bank, at the The Bank has a process whereby periodically all long- direction of the Audit Committee and with the assistance term contracts (including derivative contracts) are of this external firm, is continuing to analyze the allegations assessed for material foreseeable losses. At the year end, in the whistleblower complaint and work is currently the Bank has reviewed and recorded adequate provision ongoing. Based on work done and findings till date, the as required under any law / accounting standards for Bank has not identified any material financial statement material foreseeable losses on such long term contracts implications. The Bank will consider the implications of (including derivative contracts) in the books of account ongoing work in the next financial year as the examination and disclosed the same under the relevant notes in the of this matter is completed. financial statements. 18.20 Additional disclosure 18.18 Specified Bank Notes (SBN) Additional statutory information disclosed in the separate The disclosures regarding details of specified bank financial statements of the Bank and subsidiaries having notes held and transacted during November 8, 2016 to no material bearing on the true and fair view of the December 30, 2016 has not been made in these financial consolidated financial statements and the information statements since the requirement does not pertain to pertaining to the items which are not material have not financial year ended March 31, 2019. been disclosed in the consolidated financial statement.

18.20.1 Credit/Debit card reward points Provision for credit card and debit card reward points for the year ended March 31, 2019

Particulars ` in million Opening provision 112.12 Provision made during the year 180.73 Utilised/Write-back of provision (59.18) Closing provision 233.67

During financial year ending March 31, 2018, the Bank has expended `77.70 million for accumulated rewards points on credit and debit card.

The valuation of credit card and debit card reward points is based on actuarial valuation method obtained from an independent actuary.

300 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

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18.20.2 Corporate Social Responsibility (CSR) a) Amount required to be spent by the Bank on CSR during the year `955.8 million (previous year: `772.21 million). b) Amount spent towards CSR during the year and recognized as expense in the Profit and Loss account on CSR related activities is `537.86 million (previous year: `452.13 million), which comprise of following – (` in million) March 31, 2019 March, 31 2018 Amt unpaid Amt unpaid In cash Total In cash Total /provision /provision

Construction/acquisition of any asset ------On purposes other than (i) above 470.78 67.08 537.86 397.89 54.24 452.13

18.20.3 Un-hedged / Uncovered Foreign Currency Exposures of the Group The Group’s foreign currency exposures as at March 31, 2019 that are not hedged/covered by either derivative instruments or otherwise are within the Net Overnight Open Position limit (NOOP) and the Aggregate Gap limit, as approved by the RBI. NOOP is `2,206.32 million as at March 31, 2019 (March 31, 2018 `1,354.82 million).

18.21 Description of contingent liabilities

Sr. No. Contingent Liabilities Brief 1. Claims against the Bank not The Bank is a party to various legal and tax proceedings in the normal course acknowledged as debts of business. The Bank does not expect the outcome of these proceedings to have a material adverse effect on the Bank’s financial conditions, results of operations or cash flows. 2. Liability on account of forward The Bank enters into foreign exchange contracts, currency options, forward exchange and derivative contracts rate agreements, currency swaps and interest rate swaps with interbank participants and customers. Forward exchange contracts are commitments to buy or sell foreign currency at a future date at the contracted rate. Currency swaps are commitments to exchange cash flows by way of interest/principal in one currency against another, based on predetermined rates. Interest rate swaps are commitments to exchange fixed and floating interest rate cash flows. The notional amounts of financial instruments of such foreign exchange contracts and derivatives provide a basis for comparison with instruments recognized on the balance sheet but do not necessarily indicate the amounts of future cash flows involved or the current fair value of the instruments and, therefore, do not indicate the Bank’s exposure to credit or price risks. The derivative instruments become favorable (assets) or unfavorable (liabilities) as a result of fluctuations in market rates or prices relative to their terms. The aggregate contractual or notional amount of derivative financial instruments on hand, the extent to which instruments are favorable or unfavorable and, thus the aggregate fair values of derivative financial assets and liabilities can fluctuate significantly. 3. Guarantees given on behalf As a part of its commercial banking activities the Bank issues documentary of constituents, acceptances, credit and guarantees on behalf of its customers. Documentary credits such endorsements and other as letters of credit enhance the credit standing of the customers of the Bank. obligations Guarantees generally represent irrevocable assurances that the Bank will make payments in the event of the customer failing to fulfill its financial or performance obligations.

Annual Report 2018-19 301 Schedules forming a part of Consolidated Financial Statements

Sr. No. Contingent Liabilities Brief 4. Other items for which the Bank is Purchase of securities pending settlement, capital commitments, amount contingently liable deposited with RBI under Depositor Education Awareness Fund (DEAF), bill re-discounting, Foreign Exchange Contracts (Tom & Spot). 5. PF Liability In February 2019, the honorable Supreme Court of India in its judgment clarified that certain special allowances should be considered to measure obligations under Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (the PF Act). The Bank has been legally advised that there are interpretative challenges on the application of judgment retrospectively and as such does not consider there is any probable obligations for past periods. Due to imperative challenges, the Bank has not disclosed contingent liability amount for past liability Refer Schedule 12 for amounts relating to contingent liability.

Prior period comparatives Previous year’s figures have been regrouped where necessary to conform to current year classification.

For B S R & Co. LLP For and on behalf of the Board of Directors Chartered Accountants YES BANK Limited Firm’s Registration No: 101248W/W-100022

Venkataramanan Vishwanath Ravneet Gill Brahm Dutt Ajai Kumar Partner Managing Director & CEO Chairman Director Membership No: 113156 (DIN: 00091746) (DIN: 05308908) (DIN: 02446976)

Uttam Prakash Agarwal Raj Ahuja Shivanand R. Shettigar Director Group Chief Financial Group Company (DIN: 00272983) Officer Secretary Mumbai April 26, 2019

302 Banking Re-Imagined Corporate Sustainability Statutory Financial Overview Review Reports Statements

FORM AOC - 1 Pursuant to first proviso to sub-section (3) of section 129 read with rule 5 of Companies (Accounts) Rules, 2014

Statement containing salient features of the financial statement of subsidiaries/ associate companies/ joint ventures Part “A”: Subsidiaries (Amount in ` '000)

1 Sl. No. YES Securities YES Asset YES Trustee 2 Name of the subsidiary (India) Limited Management Limited (India) Limited

Reporting period for the subsidiary concerned, if different NA NA NA 3 from the holding company’s reporting period Reporting currency and Exchange rate as on the last date of NA NA NA 4 the relevant Financial year in the case of foreign subsidiaries 5 Share capital 800,000 745,000 5,000 6 Reserves & surplus 730,704 (206,789) (1,775) 7 Total assets 3,557,110 570,205 3,522 8 Total Liabilities 2,026,406 31,994 298 9 Investments - 300,000 - 10 Turnover 888,874 1,219 311 11 Profit / (Loss) before taxation 78,695 (161,001) (1,114) 12 Provision for taxation 26,709 - - 13 Profit / (Loss) after taxation 51,986 (161,001) (1,114) 14 Proposed Dividend - - - 15 % of shareholding 100% 100% 100%

1. Names of subsidiaries which are yet to commence operations NA NA NA 2. Names of subsidiaries which have been liquidated or sold during the year- Nil

Part “B”: Associates and Joint Ventures

Statement pursuant to section 129(3) of the Companies Act, 2013 related to Associate Companies and Joint Ventures

Not Applicable

DISCLOSURES UNDER BASEL III CAPITAL REGULATIONS – PILLAR III In accordance with RBI circular DBR.No.BP.BC.1/21.06.201/2015-16 dated July 1, 2015 on ‘Basel III Capital Regulations’ requires banks to make applicable Pillar 3 disclosures including leverage ratio under Basel III Framework. The Pillar III disclosures have not been subjected to review by the statutory auditors. The Bank has made these disclosures which are available on its website at the following link. https://www.yesbank.in/pdf/basel_iii_disclosure_mar_31_2019.pdf

Annual Report 2018-19 303 Notes